Refer to the Rapp Hardware information in Exercise E26-19. Assume the project has no residual value. Compute the ARR for the investment. Round to two places. E26-21 Using the time value of money Sharon wants to take the next five years off work to travel around the world. She estimates her annual cash needs at $34,000 (if she needs more, she will work odd jobs). Sharon believes she can invest her savings at 8% until she depletes her funds.
In Exercise 26.19
Rapp Hardware is adding a new product line that will require an investment of $1,418,000. Managers estimate that this investment will have a 10-year life and generate net cash inflows of $310,000 the first year, $290,000 the second year, and $250,000 each year thereafter for eight years