ACCT 346 Harry Corp buys equipment for $222,474 that will last for 10 years
Question # 00326056
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Updated on: 06/27/2016 07:42 AM Due on: 06/27/2016
Harry Corp buys equipment for $222,474 that will last for 10 years. The equipment will generate cash flows of $41,000 per year and will have no salvage value at the end of its life. Ignore taxes. Use 12% required rate of return.
(a) What is the Present Value (PV) of this investment (at 12%)?
(b) What is the NET Present Value (NPV) of this investment? If you need 12% should you buy the equipment?
(c) What is the Internal Rate of Return (IRR) of this investment?
(d) What is the payback period?
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Solution: ACCT 346 Harry Corp buys equipment for $222,474 that will last for 10 years