Achebe company is considering purchasing new equipment the

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Achebe Company is considering purchasing new equipment. The equipment is expected to reduce annual cash operating costs. You have the following additional information:

- Inverstment required in equipment: $600,000

- Annual reduction in cash operating costs: $100,000

- Salvage value: $0

- Life of the equipment: 10 years

- Discount rate: 12%

- Depreciation method used: Straight line

a) What is the simple rate of return on the investment? (nearest whole percent)

b) What is the net present value of the project?

c) What is the internal rate of return of the project? (Nearest whole percent)

Reference no: EM13575103

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