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Mimi Company is considering a capital investment of $275,000 in new equipment. The equipment is expected to have a 5-year useful life with no salvage value. Depreciation is computed by the straight-line method. During the life of the investment, annual net income and cash inflows are expected to be $25,000 and $80,000, respectively. Mimi's minimum required rate of return is 10%. The present value of 1 for 5 periods at 10% is .621 and the present value of an annuity of 1 for 5 periods at 10% is 3.791.Compute each of the following:a) cash payback periodb) net present valuec) annual rate of returnd) internal rate of return

Answer :

Answer:

Explanation:

a) cash payback period = 3.44 years

b) net present value = $28,280

c) annual rate of return = 9.09%

d) internal rate of return = 14.47%

The calculation is given in the attached file below and its so explanatory. Thank you

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