The latest manufacturing equipment is purchased at a cost of $800,000. As a result, annual cash revenues are expected to increase by $345,000; annual cash expenses are expected to increase by $162,000; straight-line depreciation is used; the asset has a seven-year life; the salvage value is $100,000. Assume the company is in the new 21% corporate tax bracket.

1. Determine the accounting rate of return? (round to the nearest %)

2. Determine the payback period?

3. Determine the NPV assuming a minimum required rate of return of 8%?

Answer rating: 100% (QA)

To determine the accounting rate of return payback period and NPV well use the information provided ... View the full answer