Merton Manufacturing Company has an opportunity to purchase some technologically advanced equipment that will reduce the companys

Question:

Merton Manufacturing Company has an opportunity to purchase some technologically advanced equipment that will reduce the company’s cash outflow for operating expenses by $1,280,000 per year. The cost of the equipment is $7,865,045.76. Merton expects it to have a 10-year useful life and a zero . The company has established an investment opportunity hurdle rate of 9 percent and uses the straight-line method for depreciation.

Required
Round your computations to two decimal points.
a. Calculate the of the investment opportunity.
b. Indicate whether the investment opportunity should be accepted.

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