Question
In: Accounting
Cowboy Recording Studio is considering the investment of $130,500 in a new recording equipment. It is...
Cowboy Recording Studio is considering the investment of
$130,500 in a new recording equipment. It is estimated that the new
equipment will generate additional cash flow of $19,000 per year
for each year of its 8-year life and will have a salvage value of
$13,500 at the end of its life. Cowboys’s financial managers
estimate that the firm’s cost of capital is 8%. Use Table 6-4 and
Table 6-5.(Use appropriate factor(s) from the tables
provided. Round the PV factors to 4 decimals.)
Required:
- Calculate the net present value of the investment.
- Calculate the present value ratio of the investment.
- What is the internal rate of return of this investment, relative to the cost of capital?
- Calculate the payback period of the investment.
Solutions
ekkarill92 answered 2 years agoRelated Solutions
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