Compute for the annual net cash inflow for learner company

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Reference no: EM132637589

Learner company is considering a project that would have an eight-year life and require a 2,400,000 investment in equipment. At the end of 8 years, the project would terminate and the equipment would have no salvage value.

The project would provide net operating income each year as follows:

Sales 3,000,000
Variable expenses 1,800,000
Contribution margin 1,200,000
Fixed expenses:
Advertising, salaries & other out of
Pocket costs 700,000
Depreciation 300,000 1,000,000
Net Operating Income 200,000

The company's discount rate is 12%.

Problem 1: Compute for the following:

a. Annual net cash inflow
b. NPV
c. Payback Period
d. ARR

Reference no: EM132637589

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