Diane Manufacturing Company is considering investing $500,000 in new equipment with an estimated useful life of 10
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Question:
Diane Manufacturing Company is considering investing $500,000 in new equipment with an estimated useful life of 10 years and no salvage value. The equipment is expected to produce $320,000 in cash inflows and $200,000 in cash outflows annually. The company uses straight-line depreciation, and has a 30% tax rate.
Determine the annual estimated net income and net cash inflow.
Calculate the payback period.
Calculate the accounting rate of return.
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