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Basic Concepts Roberts Company is considering an investment in equipment that is capable of producing...

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Accounting

Basic Concepts

Roberts Company is considering an investment in equipment that is capable of producing more efficiently than the current technology. The outlay required is $2,266,667. The equipment is expected to last five years and will have no salvage value. The expected cash flows associated with the project are as follows:

Year Cash Revenues Cash Expenses
1 $2,950,000 $2,270,000
2 2,950,000 2,270,000
3 2,950,000 2,270,000
4 2,950,000 2,270,000
5 2,950,000 2,270,000

The present value tables provided in Exhibit 19B.1 and Exhibit 19B.2 must be used to solve the following problems.

Required:

1. Compute the projects payback period. If required, round your answer to two decimal places. years

2. Compute the projects accounting rate of return. Enter your answer as a whole percentage value (for example, 16% should be entered as "16" in the answer box). %

3. Compute the projects net present value, assuming a required rate of return of 10 percent. When required, round your answer to the nearest dollar. $

4. Compute the projects internal rate of return. Enter your answers as whole percentage values.

Between % and %

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