Essay
(Ignore income taxes in this problem. )The management of Rosengarten Corporation is investigating the purchase of a new satellite routing system with a useful life of 7 years.The company uses a discount rate of 8% in its capital budgeting.The net present value of the investment,excluding its intangible benefits,is -$607,020.
Required:
How large would the additional cash flow per year from the intangible benefits have to be to make the investment in the automated equipment financially attractive?
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