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Timele 10:15 Tanhal Company is considering a project that would have a five-year life and require a $200,000 investment in a special equipment. At the
Timele 10:15 Tanhal Company is considering a project that would have a five-year life and require a $200,000 investment in a special equipment. At the end of five years, the project would terminate, and the equipment would have no salvage value. The project would result in cash savings of $50,000 each year for years. (The company's discount rate is 10%.) Instructions 1. Compute the project's payback period. (1.5 marks) 2. Compute the simple rate of return for the machine. (3 marks) 3. Compute the project's net present value (3 marks). Is the project acceptable? (1 mark) 4. Explain the disadvantages of the payback method? (1.5 marks) Format Answer 1)Payback period 2) Simple rate of return 3) Net present value 4) Disadvantages of the payback method A co fa %
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