Dillard Corporation is considering an investment in a labor-saving machine. Information on this machine follows: Cost Salvage value in five years Estimated life Annual depreciation Annual reduction in existing costs $30,000 $0 5 years $6,000 $8,000 a. What is the internal rate of return on this project? 37.5% or 10.5% b. Assume for this question only that Dillard Corporation uses a discount rate of 16 percen to evaluate projects of this type. What is the project's net present value? $ (3,806) c. What is the payback period on this investment?

Dillard Corporation is considering an investment in a labor-saving machine. Information on this machine follows: Cost Salvage value in five years Estimated life Annual depreciation Annual reduction in existing costs $30,000 $0 5 years $6,000 $8,000 a. What is the internal rate of return on this project? 37.5% or 10.5% b. Assume for this question only that Dillard Corporation uses a discount rate of 16 percen to evaluate projects of this type. What is the project's net present value? $ (3,806) c. What is the payback period on this investment?

Name: a7 Dillard CorporationDillard Corporation is considering an investment
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Description: a7 Dillard CorporationDillard Corporation is considering an investment in a labor-saving machine. Information on thismachine follows:CostSalvage value in five yearsEstimated lifeAnnual depreciationAnnual reduction in existing costs$30,000$05 years$6,

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 4PB

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