Initial investment in equipment Annual cash increase in operations: Year 1 Year 2 Year 3 Salvage...
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Initial investment in equipment Annual cash increase in operations: Year 1 Year 2 Year 3 Salvage value Estimated life Required: Proposal A Proposal B Proposal C $90,000 $90,000 $90,000 b. Why? 80,000 10,000 45,000 0 3 yrs 45,000 90,000 45,000 45,000 0 3 yrs The company uses straight-line depreciation for all capital assets. 0 0 0 1 yr a. Compute the payback period, net present value, and accrual accounting rate of return with initial investment, for each proposal. Use a required rate of return of 14%. Rank each proposal 1, 2, and 3 using each method separately. Which proposal is best? Initial investment in equipment Annual cash increase in operations: Year 1 Year 2 Year 3 Salvage value Estimated life Required: Proposal A Proposal B Proposal C $90,000 $90,000 $90,000 b. Why? 80,000 10,000 45,000 0 3 yrs 45,000 90,000 45,000 45,000 0 3 yrs The company uses straight-line depreciation for all capital assets. 0 0 0 1 yr a. Compute the payback period, net present value, and accrual accounting rate of return with initial investment, for each proposal. Use a required rate of return of 14%. Rank each proposal 1, 2, and 3 using each method separately. Which proposal is best?
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The image shows a table with financial information for three proposals A B and C including the initial investment annual cash increase in operations by year salvage value and estimated life of the equ... View the full answer
Related Book For
Fundamentals of Financial Management
ISBN: 978-0324597707
12th edition
Authors: Eugene F. Brigham, Joel F. Houston
Posted Date:
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