Refer to the Turner Hardware information in E12- 37B. Compute the ARR for the investment.
In E12- 37B
Turner 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 $ 325,000 the first year, $ 300,000 the second year, and $ 230,000 each year thereafter for eight years. The investment has no residual value. Compute the pay-back period.