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Darth Company Is Considering the Purchase of New Heavy Construction

question 68

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Darth Company is considering the purchase of new heavy construction equipment that will cost $2,000,000 and have a life of eight years with no expected salvage value. The expected cash flows associated with the project are as follows:
 Cash  Cash Expenses &  Year  Revenues  Depreciation 1$2,400,000$1,900,0002$2,400,000$1,900,0003$2,400,000$1,900,0005$2,400,000$1,900,0006$2,400,000$1,900,0007$2,400,000$1,900,0008$2,400,000$1,900,000$2,400,000$1,900,000\begin{array}{lll}&\text { Cash } & \text { Cash Expenses \& } \\\text { Year } &\text { Revenues }&\text { Depreciation }\\1 & \$ 2,400,000 & \$ 1,900,000 \\2 & \$ 2,400,000 & \$ 1,900,000 \\3 & \$ 2,400,000 & \$ 1,900,000 \\5 & \$ 2,400,000 & \$ 1,900,000 \\6 & \$ 2,400,000 & \$ 1,900,000 \\7 & \$ 2,400,000 & \$ 1,900,000 \\8 & \$ 2,400,000 & \$ 1,900,000 \\& \$ 2,400,000 & \$ 1,900,000\end{array}
-Refer to the Figure.What is the average annual income for this project?

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