Question: ok Ursus, Incorporated, is considering a project that would have a ten-year life and would require a $1,806,000 investment in equipment. At the end

ok Ursus, Incorporated, is considering a project that would have a ten-year

ok Ursus, Incorporated, is considering a project that would have a ten-year life and would require a $1,806,000 investment in equipment. At the end of ten years, the project would terminate and the equipment would have no salvage value. The project would provide net operating income each year as follows (Ignore income taxes.): Sales Variable expenses Contribution margin Fixed expenses: $2,000,000 1,350,000 650,000 Fixed out-of-pocket cash expenses Depreciation Net operating incone $ 230,000 180,600 410,600 $ 239,400 Click here to view Exhibit 128-1 and Exhibit 128-2, to determine the appropriate discount factor(s) using the tables provided. All of the above items, except for depreciation, represent cash flows. The company's required rate of return is 14%. Required: a. Compute the project's net present value. (Round your intermediate calculations and final answer to the nearest whole dollar amount.) b. Compute the project's internal rate of return. (Round your final answer to the nearest whole percent.) c. Compute the project's payback period. (Round your answer to 2 decimal place.) d. Compute the project's simple rate of return. (Round your final answer to the nearest whole percent.). a. Net present value b. Internal rate of retur c. Payback period d. Simple rate of retumi % years %

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!