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Sam's Structures Desires to Buy a New Crane and Accessories

question 74

Essay

Sam's Structures desires to buy a new crane and accessories to help move and install modular buildings. The machine sells for $75,000 and requires working capital of $10,000. Its estimated useful life is six years and it will have a salvage value of $17,560. Recovery of working capital will be $10,000 at the end of its useful life. Annual cash savings from the purchase of the machine will be $20,000.
Required:
a.Compute the net present value at a 12% required rate of return.
b.Compute the internal rate of return.
c.Determine the payback period of the investment.


Definitions:

Positive Emotions

are feelings that are enjoyable and uplifting, such as happiness, joy, and contentment, contributing to overall well-being and satisfaction.

Extraversion

A personality trait characterized by sociability, talkativeness, assertiveness, and high levels of emotional expressiveness.

Emotional Stability

An individual's ability to remain calm and composed, especially in stressful situations, reflecting low levels of neuroticism.

Self-Esteem

An individual’s subjective evaluation of their own worth or value.

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