Spanish Peaks Railroad Inc. is considering acquiring equipment at a cost of $305,000. The equipment has an estimated life of 10 years and no residual value. It is expected to provide yearly net cash flows of $61,000. The company's minimum desired rate of return for net present value analysis is 15%.
Compute the following:
a. The average rate of return, giving effect to straight-line depreciation on the investment. If required, round your answer to one decimal place.fill in the blank 1 %
b.The cash payback period. years
c.The net present value. Use the above table of the present value of an annuity of $1. Round to the nearest dollar. If required, use a minus sign to indicate a negative net present value for the current grading purposes.
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