Problem:
Sac need to manufacure 100,000.00 per year a life of 5 years and no salvage value. The straight line method will be used and there will be depreciation, the average cost is $20.00/ the expected cost of $8 to manufacture the new equipment.
The initial investment is 3,000,000.00 to purchase
Tax rate 34%
Payback and IRR and NPV method used
% of capital Rate of Return
Stocks 60% 14%
Bonds 40% 6%