Exercise 12-10 vilas Company Is considering a capital Investment of $190,700 in

Question

Exercise 12-10 vilas Company Is considering a capital Investment of $190,700 in additional productive facilities. The new machinery is expected to have a useful life of 5 years with no salvage value. Depreciation is by the straight-line method. During the lfe of the investment, annual net income and net annual cash fo s are expected to be tis zo and SSO 00 espectivety vie hei·2% et artapiw rate, which is the required rate of return on the investment. Compute the cash payback period. (Round answer to 2 declmal places,e.g. 10.50) Cash payback period Compute the annual rate of return on the proposed capital expenditure. (Round answer to 2 decimal places, eg. 10.50.) years Annual rate of return Using the discounted cash fow technique, compute the net present value. (T the net present value is negative, use either a negative sign areceding the number e.g. 4s or parentheses e.g. (45). Round answer for present value to o decimal places, e.g. 125. For calculation purposes, use 5 decimal places as displayed in the foctor table provided,) Net present value

Explanation / Answer

a Cash payback period = 190700/50000= 3.81 years b Annual rate of return = 15700/(190700/2)= 16.47% c Net present value = (50000*3.60478)-190700= -10461

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.