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What is the arr for project

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Home Decor Pty Ltd is considering investing in a new machine to assemble its furniture. The machine is estimated to cost $150,000 which can last for 5 years before it becomes unreliable and can be sold for scrap at $12,000. The project is estimated to bring in additional $40,000 net cash inflow annually. Although the company expects there will be an annual growth from year 2 onward, it also estimates the growth will be offset by a 2% annual inflation . The net cash flow in year 5 also includes the scrap value.

The company plans to fund the purchase of the new machine using a bank loan with an interest rate of 13%.

a. What is the ARR for this project? Blank 1%. Case sensitive. Type in 20.00 (two decimal places) for 20%.

b. How long is the payback period for this project? Blank 2 years. Case sensitive. Type in 7.00 (two decimal places) for 7 years.

c. What is the NPV for this project? $Blank 3. Case sensitive. Type in 120,000.00 (two decimal places) for $120,000.00, or -120,000.00 for negative $120,000.00.

d. What is the IRR for this project? Blank 4%. Case sensitive. Type in 20.00 (two decimal places) for 20%.

Reference no: EM132398373

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