Briar Corp

question 104

Essay

Briar Corp.is considering the purchase of a new piece of equipment.The cost savings from the equipment would result in an annual increase in cash flow of $200,000.The equipment will have an initial cost of $1,200,000 and have an 8-year life.The salvage value of the equipment is estimated to be $200,000.The hurdle rate is 8%.Ignore income taxes.Answer the following:
a.What is the accounting rate of return?
b.What is the payback period?
c.What is the net present value?
d.What would the net present value be with a 12% hurdle rate?
e.Based on the NPV calculations,in what range would the equipment's internal rate of return fall?

---

Definitions:

User-Generated Contents

Content created and shared by consumers or users of online platforms, rather than by professional content creators or companies.

Editorial Section

A section in newspapers or magazines featuring opinion pieces, editorials, and commentary on current topics, distinct from news reporting.

Booksellers

Entities or individuals involved in the retailing of books, both in physical stores and online platforms.

Publisher's Catalogue

A comprehensive list or collection of books and other materials available for sale or distribution by a publishing company.