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Compute the payback periodcompute the accounting rate of

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Reference no: EM13601412

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.
C) Compute the accounting rate of return using the initial required investment.

Reference no: EM13601412

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