Tranter, Inc., is considering a project that would have a nine-year life and wou

Question

Tranter, Inc., is considering a project that would have a nine-year life and would require a $4,004,000 investment in equipment. At the end of nine years, the project would terminate and the equipment would have no salvage value. The project would provide net operating income each year as follows: Click here to view Exhibit 8B-2, to determine the appropriate discount factor(s) using tables. All of the above items, except for depreciation, represent cash flows. The company's required rate of return is 11%. Compute the project's net present value. (Negative amount should be indicated by a minus sign. Round your final answer to the nearest dollar amount. Omit the "$" sign in your response.) Compute the project's internal rate of return (Round your final answer to the closest interest rate. Omit the "%" sign in your response.) Compute the project's payback period. (Round your answer to 1 decimal place.) Compute the project's simple rate of return. (Round your final answer to the closest percentage. Omit the "%" sign in your response.)

Explanation / Answer

ANSWER:- NPV -254870

IRR 6.56%

PAY BACK PERIOD 8.52

SIMPLE RATE OF RETURN 11.73%

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