Reference no: EM13777583
Bryant Company has obtained the following data about a possible planned investment:
Cost $270,000
Terminal salvage value in 8 years $10,000
Additional annual revenues for 8 years $250,000
Additional annual cash expenses for 8 years $200,000
Estimated useful life in years 8
Minimum desired rate of return 10%
Present value of ordinary annuity, 10%, 8 periods 5.3349
Present value of one, 10%, 8 periods 0.4665
The company uses straight-line depreciation method. Ignore income taxes.
Required:
A) Compute the net present value of the investment.
B) Compute the payback period.
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