Question
TSB machine project is a nonprofit organization and the expected additional operating cash inflows are $130,000 in years 1 through 5. The net initial investment
- TSB machine project is a nonprofit organization and the expected additional operating cash inflows are $130,000 in years 1 through 5. The net initial investment is $392,500. A five year useful life, no terminal disposal value, and an 8% Required Rate of Return.
Required: Calculate the following: Net present value, Internal rate of return, Reverse Payback Period, Break even time, and Profitability Index.
B) WT paper corporation is considering adding another machine for the manufacture of corrugated cardboard. The machine would cost $900,000. It would have an estimated life of 6 years and no salvage value. The company estimates that annual revenues would increase by $430,000 and that annual expenses excluding depreciation would increase by $190,000. Depreciation expense $150,000 per year. Management has a required rate of return of 9%. Compute the accounting rate of return.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started