Etsitty Arts, Inc., a leading manufacturere of fine cast silver jewerly, is thinking of purchasing of new casting equipment which will permit it to expand product line into award plaques. Proposed initial investment is $35,000. Company expects that equipment will manufacture steady income throughout its 12-year life.
a. If Etsitty needs 14% return on its investment, determine minimum yearly cash inflow which will be essential for company to go forward with this project?
b. describe how would minimum yearly cash inflow change if company needed 10% return on its investment?