Clarissa Hardware is currently considering the purchase equipment that costs $55 000. As a result of...

Clarissa Hardware is currently considering the purchase equipment that costs $55 000. As a result of the purchase, it will generate some additional cash flows for the company.

The cash inflows for the years are given as follows:

The first three years - $8 000 per year, the fourth year - $10 000 and the fifth year to the seventh year - $15 000 per year. Assuming the required rate of return = 3%

Assessment Task

Calculate:

Discounted payback period

Net Present Value (

Internal rate of return (

Should the company go ahead with the purchase? Why?

Expert Solution

The company should go ahead with the project

jeff jeffy answered 2 years ago

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