Reference no: EM132281922

Complete Exercise 19.10 (Page 1033)

Basic Concepts

Roberts Company is considering an investment in equipment that is capable of producing more ef?ciently than the current technology. The outlay required is $2,293,200. The equipment is expected to last ?ve years and will have no salvage value. The expected cash ?ows associated with the project are as follows:

Year Cash Revenues Cash Expenses

1 $2,981,160 $2,293,200

2 2,981,160 2,293,200

3 2,981,160 2,293,200

4 2,981,160 2,293,200

5 2,981,160 2,293,200

Required:

1. Compute the project's payback period.

2. Compute the project's accounting rate of return.

3. Compute the project's net present value, assuming a required rate of return of 10 percent.

4. Compute the project's internal rate of return.