Calculate the net present value

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Reference no: EM132990337

Question - TSB machine project is a nonprofit organization and the expected additional operating cash inflows are $130,000 in years 1 through 5. The net initial investment is $392,500. A five year useful life, no terminal disposal value, and an 8% Required Rate of Return.

WT paper corporation is considering adding another machine for the manufacture of corrugated cardboard. The machine would cost $900,000. It would have an estimated life of 6 years and no salvage value. The company estimates that annual revenues would increase by $430,000 and that annual expenses excluding depreciation would increase by $190,000. Depreciation expense $150,000 per year. Management has a required rate of return of 9%.

Required -

A) Calculate the following: Net present value, Internal rate of return, Reverse Payback Period, Break even time, and Profitability Index.

B) Compute the accounting rate of return.

Reference no: EM132990337

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