Question: Omega LLC is considering purchasing new equipment: Initial cost: $600,000 Net annual benefits: Year 1: $110,000 Year 2: $120,000 Year 3: $130,000 Year 4: $140,000

Omega LLC is considering purchasing new equipment:

  • Initial cost: $600,000
  • Net annual benefits:
    • Year 1: $110,000
    • Year 2: $120,000
    • Year 3: $130,000
    • Year 4: $140,000
    • Year 5: $150,000

Requirements:

  1. Calculate the NPV at a discount rate of 7%.
  2. Determine the payback period.
  3. Compute the IRR.
  4. Evaluate the PI.

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