question archive Continental Railroad Inc
Continental Railroad Inc
Subject:AccountingPrice:2.89 Bought3
Continental Railroad Inc. is considering acquiring equipment at a cost of $552,000. The equipment has an estimated life of 10 years and no residual value. It is expected to provide yearly net cash flows of $92,000. The company’s minimum desired rate of return for net present value
analysis is 10%.
Compute the following:
(a) The average rate of return, giving effect to straight-line depreciation on the investment, Round whole present to one decimal place.
(b) The cash pay back period.
(c) The net present value
. Use the present value of an annuity of $1 table appearing in this chapter (Exhibit 2). Round to the nearest dollar.
