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Roshek Company is considering a capital investment proposal. Estimates regarding the project are provided below: I nitial...

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Finance

Roshek Company is considering a capital investment proposal.Estimates regarding the project are provided below: I

nitial Investment: $85,000

Annual Net income: $5,750

Estimated Useful Life: 5 years

Salvage Value: $10,000

The Company requires a 9% rate of return on all newinvestments.

a. The Payback Period (rounded) for this proposal is?

b. The Net Present Value (rounded) for this proposal is?

c. The Annual Rate of Return (rounded) for this proposal is?

Answer & Explanation Solved by verified expert
4.4 Ratings (775 Votes)
Cash flows for the year 1 4 as net income initial investmentsalvage value life 5750 85000100005 20750 and for the last year 5750 85000100005 10000 30750 a Year Cash flow stream Cumulative cash flow 0 85000 85000 1 20750 64250 2 20750 43500 3 20750 22750 4 20750 2000    See Answer
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Roshek Company is considering a capital investment proposal.Estimates regarding the project are provided below: Initial Investment: $85,000Annual Net income: $5,750Estimated Useful Life: 5 yearsSalvage Value: $10,000The Company requires a 9% rate of return on all newinvestments.a. The Payback Period (rounded) for this proposal is?b. The Net Present Value (rounded) for this proposal is?c. The Annual Rate of Return (rounded) for this proposal is?

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