Spanish Peaks Railroad Inc. is considering acquiring equipment at a cost of $132,000. The equipment has an estimated life of 10 years and no residual value. It isexpected to provide yearly net cash flows of $33,000. The company's minimum desired rate of return for net present value analysis is 10%.Present Value of an Annuity of $1 at Compound InterestYear6%10%12%15%20%0.9430.9090.8930.8700.83321.8331.7361.6901.6261.52832.6732.4872.402-2.2832.10643.4653.1703.0372.8552.5894.2123.7913.6053.3532.9914.9174.3554.1113.7853.32675.5824.8684.5644.1603.6056.2105.3354.9684.4873.8376.8025.7595.3284.7724.031107.3606.1455.6505.0194.192Compute the following:The average rate of return, giving effect to straight-line depreciation on the investment. If required, round your answer to one decimal place.%b. The cash payback period.c. The net present value. Use the above table of the present value of an annuity of $1. Round to the nearest dollar. If required, use a minus sign to indicate negativenet present value for current grading purpose.Present value of annual net cash flowsAmount to be investedNet present valueNevt%24%24%24

a) Calculation of the average rate of return - Straight-line depreciation Particulars Equipment…

a. The average rate of return, giving effect to straight-line depreciation on the investment. If required, round your answer to one decimal place. b. The cash payback period. cC. The net present value. Use the above table of the present value of an annuity of $1. Round to the nearest dollar. If required, use a minus sign to indicate negative net present value for current grading purpose. Present value of annual net cash flows Amount to be invested

a. The average rate of return, giving effect to straight-line depreciation on the investment. If required, round your answer to one decimal place. b. The cash payback period. cC. The net present value. Use the above table of the present value of an annuity of $1. Round to the nearest dollar. If required, use a minus sign to indicate negative net present value for current grading purpose. Present value of annual net cash flows Amount to be invested

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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