Basic Concepts Roberts Company is considering an investment in equipment that is capable of producing more efficiently...

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Accounting

Basic Concepts
Roberts Company is considering an investment in equipment thatis capable of producing more efficiently than the currenttechnology. The outlay required is $2,293,200. The equipment isexpected to last five years and will have no salvage value. Theexpected cash flows associated with the project are as follows:
Year Cash Revenues Cash Expenses
1 $2,981,160 $2,293,200
2 2,981,160 2,293,200
3 2,981,160 2,293,200
4 2,981,160 2,293,200
5 2,981,160 2,293,200
The present value tables provided in Exhibit 19B.1 and Exhibit19B.2 must be used to solve the following problems.
Required:
1. Compute the project’s payback period. Ifrequired, round your answer to two decimal places.
years
2. Compute the project’s accounting rate ofreturn. Enter your answer as a whole percentage value (for example,16% should be entered as "16" in the answer box).
%
3. Compute the project’s net present value,assuming a required rate of return of 10 percent. When required,round your answer to the nearest dollar.
$
4. Compute the project’s internal rate ofreturn. Enter your answers as whole percentage values (for example,16% should be entered as "16" in the answer box).
Between % and %

Answer & Explanation Solved by verified expert

3.6 Ratings (517 Votes)

Year Cash Revenues Cash Expenses Net cash flow 1 2981160 2293200 687960 2 2981160 2293200 687960 3 2981160 2293200 687960 4 2981160 2293200 687960 5 2981160 2293200 687960 Total 3439800 1 projects payback period See Answer

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Year	Cash Revenues	Cash Expenses
1	$2,981,160	$2,293,200
2	2,981,160	2,293,200
3	2,981,160	2,293,200
4	2,981,160	2,293,200
5	2,981,160	2,293,200