Riverbend Company runs hardware stores in a tristate area. Riverbends management estimates that if it...
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Riverbend Company runs hardware stores in a tristate area. Riverbends management estimates that if it invests $250,000 in a new computer system, it can save $67,000 in annual cash operating costs. The system has an expected useful life of eight years and no terminal disposal value. The required rate of return is 8%. Assume all cash flows occur at year-end except for initial investment amounts. Calculate the following for the new computer system: Required a. Net present value b. Payback period c. Discounted payback period d. Internal rate of return (using the interpolation method) e. Accounting rate of return based on the net initial investment (assume straight-line depreciation) (25 marks)
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