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ACC - Whipple Company wants to buy a numerically controlled

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Question;Whipple Company wants to buy a numerically controlled (NC) machine to be used in producing specially machined parts for manufacturers of tractors. The outlay required is $480,000. The NC equipment will last five years with no expected salvage value. The expected after-tax cash flows associated with the project follow:Year 1 Cash Revenues Cash Expenses1 $780,000 $600,0002 780,000 600,0003 780,000 600,0004 780,000 600,0005 780,000 600,0001. Compute the payback period for the NC equipment.2. Compute the NC equipment's ARR3. Compute the investments NPV, assuming a required rate of return of 10 percent4. Compute the investments IRR.

 

Paper#43300 | Written in 18-Jul-2015

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