To be convincing, sufficient support for your recommendations must be provided in order to be considered valid and accepted.

Existing Equipment
Original Cost 60,000
Present Book Value 30,000
Annual Cash Operating Costs 145,000
Current Market Value 15,000
Market Value in Ten Years 0
Remaining useful Life 10 years

Replacement Equipment
Cost 600,000
Annual Cash Operating Costs 50,000
Market Value in Ten Years 0
Useful Life 10 years

Other Information
Cost of Capital 10%
Payback requirement 6 years

In this assignment, use the information above to develop a comprehensive analysis using NPV, Payback Method, and IRR to develop a recommendation on replacing the existing equipment with a new computerized version.

Using your knowledge of capital budgeting techniques, explain how principles of capital budgeting, Calculate the payback method, IRR, and NPV, and how it can be used to assess the potential projects and assist in the decision-making process.

Calcualte the NPV, the IRR and payback method for this project.