Ursus, Inc., is considering a project that would have a 10-year
life and would require a $2,544,000 investment in equipment. At the
end of 10 years, the project would terminate, and the equipment
would have no salvage value.
Each of the 10 years, the project would provide sales of
$2,400,000, incur variable expenses of 65% of sales, fixed out of
pocket expenses of $290,000, and depreciation using the
straight-line method. All of the revenues and expenses, except for
depreciation, represent cash flows.
The company's required rate of return is 14%.
A. Compute the project's net present value.
B. Compute the project's internal rate of return.
C. Compute the project's payback period.
D. Compute the project's simple rate of return.
Ursus, Inc., is considering a project that would have a 10-year life and would require a $2,544,000 investment in equipm
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