(Ignore Income Taxes in This Problem

question 83

Essay

(Ignore income taxes in this problem. )The management of Rosengarten Corporation is investigating the purchase of a new satellite routing system with a useful life of 7 years.The company uses a discount rate of 8% in its capital budgeting.The net present value of the investment,excluding its intangible benefits,is -$607,020.
Required:
How large would the additional cash flow per year from the intangible benefits have to be to make the investment in the automated equipment financially attractive?

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Definitions:

Creditors' Rights

Legal rights that enable creditors to collect debts owed to them, including the right to sue, garnish wages, or foreclose property.

Real Property

Land and anything permanently attached to it, such as buildings, also known as real estate.

Execution

An action to carry into effect the directions in a court decree or judgment.

Attachment

(1) In the context of secured transactions, the process by which a security interest in the property of another becomes enforceable. (2) In the context of judicial liens, a court-ordered seizure and taking into custody of property prior to the securing of a judgment for a past-due debt.