Refer to the Blue Mountain Hardware information in E12- 19A. Compute the ARR for the investment.
In e12- 19a
Blue Mountain Hardware is adding a new product line that will require an investment of $ 1,450,000. Managers estimate that this investment will have a 10- year life and generate net cash inflows of $ 305,000 the first year, $ 290,000 the second year, and $ 255,000 each year thereafter for eight years. The investment has no residual value. Compute the payback period.