Chapter 19, Problem 10E

Roberts Company is considering an investment in equipment that is capable of producing more efficiently than the current technology. The outlay required is $2,293,200. The equipment is expected to last five years and will have no salvage value. The expected cash flows associated with the project are as follows:

Required:

1. 1. Compute the project’s payback period.
2. 2. Compute the project’s accounting rate of return.
3. 3. Compute the project’s net present value, assuming a required rate of return of 10 percent.
4. 4. Compute the project’s internal rate of return.