Compute the project payback period

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Reference no: EM132280957

Basic Concepts

Roberts Company is considering an investment in equipment that is capable of producing more ef?ciently than the current technology. The outlay required is $2,293,200. The equipment is expected to last ?ve years and will have no salvage value. The expected cash ?ows 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

Required:

1. Compute the project's payback period.

2. Compute the project's accounting rate of return.

3. Compute the project's net present value, assuming a required rate of return of 10 percent.

4. Compute the project's internal rate of return.

Reference no: EM132280957

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