Reference no: EM131777125

To be convincing, sufficient support for your recommendations must be provided in order to be considered valid and accepted.

Existing Equipment
Original Cost	60,000
Present Book Value	30,000
Annual Cash Operating Costs	145,000
Current Market Value	15,000
Market Value in Ten Years	0
Remaining useful Life	10 years

Replacement Equipment
Cost	600,000
Annual Cash Operating Costs	50,000
Market Value in Ten Years	0
Useful Life	10 years

Other Information
Cost of Capital	10%
Payback requirement	6 years

In this assignment, use the information above to develop a comprehensive analysis using NPV, Payback Method, and IRR to develop a recommendation on replacing the existing equipment with a new computerized version. 

Using your knowledge of capital budgeting techniques, explain how principles of capital budgeting, Calculate the  payback method, IRR, and NPV, and how it can be used to assess the potential projects and assist in the decision-making process.

Calcualte the NPV, the IRR and payback method for this project.