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Toya Company plans to buy equipment at a cost of Rs 5,000,000 that is expected to save Rs 1,150,000 in cash operating costs per year.
Toya Company plans to buy equipment at a cost of Rs 5,000,000 that is expected to save Rs 1,150,000 in cash operating costs per year. Its estimated useful life is 10 years, and it will have no terminal disposal value. The required rate of return is 14%. Ignore income tax issues.
Required
Compute the following:
- Net present value
- Payback period
- Internal rate of return
- Accrual accounting rate of return based on net initial investment I assume straight-line depreciation)
Present value table
Periods2%4%6%8%10%12%14%16%18%20%
98.1627.4356.8026.2475.7595.3284.9464.6074.3034.031
108.9838.1117.3606.7106.1455.6505.2164.8334.4944.192
119.7878.7607.8877.1396.4955.9385.4535.0294.6564.327
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