purchase of new lawn equipment. A supplier has Myrna's current equipment. The package price is $30,000. the equipment wi

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Purchase Of New Lawn Equipment A Supplier Has Myrna S Current Equipment The Package Price Is 30 000 The Equipment Wi 1 (39.74 KiB) Viewed 27 times

purchase of new lawn equipment. A supplier has Myrna's current equipment. The package price is $30,000. the equipment will make her more efficient, and therefore it will increase her cashflow and net income for the next five year as below. The equipment will have a 5 useful life and have no salvage value. Myrna's cost of capital is 8%. Year 1 Year 2 Year 3 Year 4 Year Net Incomes 10,000 11,000 12.000 12,500 13,5 Net Cash Flows 16,000 17,000 18,000 18,500 19.5 PV of 1 8% 0.9259 0.8573 0.7938 0.7350 0.6E Instructions a) Calculate the cash payback period. b) Calculate the machine's internal rate of return. c) Calculate the machine's net present value using a discount rate of 8%. d) Calculate the Profitability Index e) Calculate the Average Annual Rate of Return