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Compute internal rate of return of the truck

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Reference no: EM132578860

Arain Carriage Company is considering to purchase a large truck. The expected useful life of the truck is 14 years. The cost and net cash inflow associated with the new truck is as follows:

Cost of new truck: $273,400

Expected annual net cash inflow: $50,000

Required:

Question 1: Compute internal rate of return of the truck. Is the investment in trucks desirable if management of arain company wants a 15% return on all such investments?

Question 2: Using NPV technique this project would be accepted ?

Question 3: If arain Carriage Company want to cover investment in 3 years than this project would be rejected?

Question 4: Compute also PI and AAR.

Reference no: EM132578860

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