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MerrkdGT Gaming company is considering an investment in a new PC equipment costing $260,000. The...

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Accounting

MerrkdGT Gaming company is considering an investment in a new PC equipment costing $260,000. The equipment is projected to have a 5-year lifespan without any salvage value. The anticipated annual net cash flows amount to $32,500, and the projected net income is $40,000. The company's required rate of return is 10%.

Based on the given information, calculate the following:

  1. Cash Payback Period
  2. Net Present Value
  3. Annual Rate of Return

Additionally, MerrkdGT accepts investments that meet the following criteria:

  • Cash Payback period equal to or less than the useful life,
  • Positive Net Present Value (NPV),
  • Annual Rate of Return greater than 35%.

Considering these criteria, determine whether the investment should be accepted or not. Provide a clear answer (Yes or No) and explain the reasoning behind your decision.

Guidelines: PLEASE demonstrate your calculations for each item step-by-step and number the answers accordingly.

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