Sam's Structures desires to buy a new crane and accessories to help move and install...
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Sam's Structures desires to buy a new crane and accessories to help move and install modular buildings. The machine sells for $ and requires working capital of $ Its estimated useful life is six years and it will have a salvage value of $ Sams depreciates all equipment on a straight line basis. Recovery of working capital will be $ at the end of its useful life. Annual cash savings from the purchase of the machine will be $ Required: a Compute the net present value at a required rate of return. b Compute the internal rate of return. c Compute the Accounting Rate of Return d Determine the payback period of the investment.
Sam's Structures desires to buy a new crane and accessories to help move and install modular
buildings. The machine sells for $ and requires working capital of $ Its estimated
useful life is six years and it will have a salvage value of $ Sams depreciates all
equipment on a straight line basis. Recovery of working capital will be $ at the end of its
useful life. Annual cash savings from the purchase of the machine will be $
Required:
a Compute the net present value at a required rate of return.
b Compute the internal rate of return.
c Compute the Accounting Rate of Return
d Determine the payback period of the investment.
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