Refer to the West Hill Hardware information in E12-18A. Compute the ARR for the investment.
Refer To West Hill Hardware Information In E12-18A
West Hill Hardware is adding a new product line that will require an investment of $1,500,000. Managers estimate that this investment will have a 10-year life and generate net cash inflows of $310,000 the first year, $300,000 the second year, and $250,000 each year thereafter for eight years. The investment has no residual value. Compute the payback period.