The Golden Company specializes in manufacturing goldplated jewelry. The company is considering buying new equipment costing $220,000 to improve the efficiency of the production process. The equipment is expected to generate a steady income throughout its 10-year life.
a. Calculate the minimum yearly cash inflow necessary for this investment to be accepted if the required return on investment is 8%.
b. Calculate the minimum yearly cash inflow necessary if the required return on investmentchanges to 12%.