8. Calculate the payback 9. Calculate the ARR. Round the percentage to two decim

Question

8. Calculate the payback 9. Calculate the ARR. Round the percentage to two decimal places. 10. Based on your answers to the above question, should little invest in the machinery? 8. Calculate the payback 9. Calculate the ARR. R 10. Based on your answer machinery: machinery? i Data Table $ Initial investment Residual value Expected annual net cash inflows Expected useful life Required rate of return 525,000 25,000 75,000 8 years 13% Print Done n the input fields and then continue to the next question.

Explanation / Answer

8

Calculate Payback =Intial Investment/Expected Annual Cash Flow

=525000/75000

=7 Years

9

Average amount Invested=(Amount Invested +Resdual Value)/2

=(525000+25000)/2=275000

Net Income =Cash Flow Less Depreciation

=75000-(525000-25000)/8

=12500

ARR=Net Income/Average amount Invested=12500/275000=4.55%

10

Should Not,less

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