Using the following:

US $84,000

Meter Reading 26,109 Hours

Serial # KPZ00698

Cost of Capital 10% (due to age of equipment)

Hurdle rate 10%

Cash Flow $10,500 per year for 10 years

Depreciation 40,000 hours, Salvage $4,000, annual hours 4,000

Company cannot use financing sources available under its cost of capital average with local banks and lendin companies on this age of equipment. Therefore the cost of capital is higher. 2

Find the Following:

Initial Investment

Net Annual Income

Net Annual Cash Flow

Project Life

Depreciation Annual

Accounting Rate of Return

Payback period

NPV

Profitability index

NOTE* You may not need to use all the info given