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You are considering purchasing a new production facility to expand operations. The building and machinery will cost $800,000 and be depreciated over 10 years using
You are considering purchasing a new production facility to expand operations. The building and machinery will cost $800,000 and be depreciated over 10 years using the straight-line method with no salvage value at the end of the equipment-life. You require a 12% rate of return on the project.
The cost and revenue information follows in the table below:
Determine the NPV of the new facility.
Calculate the IRR (approximate).
Calculate the payback period.
Calculate the accounting rate of return.
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