In: Accounting
Jarvey Corporation is studying a project that would have a ten-year life and would require a $450,000 investment in equipment which has no salvage value. The project would provide net operating income each year as follows for the life of the project (Ignore income taxes.):
Sales (cash) |
$ |
500000 |
||
Less cash variable expenses |
200000 |
|||
Contribution margin |
300000 |
|||
Less fixed expenses: |
||||
Fixed cash expenses |
$ |
150000 |
||
Depreciation expenses |
45000 |
195000 |
||
Net operating income |
$ |
105000 |
The company's required rate of return is 12%. Calculate: did you copy?y