assumed to take place at the end of the year. The salvage value of the investment at the end of each year is equal to its book value. There would be no salvage value at the end of the investment's life. Year 0 1 2 3 5 Investment Proposal Initial Cost and Book: Value $104,100 69,500 41.700 20,800 6,400 0 Annual Cash Flows: $45,200 39,400 35,300 29,000 24,500 Annual Net Income $10,600 11,600 14,400 14,600 18,100 Drake Corporation uses an 11% target rate of return for new investment proposals.
assumed to take place at the end of the year. The salvage value of the investment at the end of each year is equal to its book value. There would be no salvage value at the end of the investment's life. Year 0 1 2 3 5 Investment Proposal Initial Cost and Book: Value $104,100 69,500 41.700 20,800 6,400 0 Annual Cash Flows: $45,200 39,400 35,300 29,000 24,500 Annual Net Income $10,600 11,600 14,400 14,600 18,100 Drake Corporation uses an 11% target rate of return for new investment proposals.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please do not give solution in image format thanku
Transcribed Image Text:each year, the net cash flows for each year, and the net income for each year are presented in the schedule below. All cash flows are
assumed to take place at the end of the year. The salvage value of the investment at the end of each year is equal to its book value.
There would be no salvage value at the end of the investment's life.
Investment Proposal
Year
0
1
2
3
4
5
Initial Cost
and Book.
Value
$104,100
69,500
41.700
20,800
6,400
0
Annual
Cash Flows
$45,200
39,400
35,300
29,000
24,500
Annual
Net Income
$10,600
11,600
14,400
14,600
18,100
Drake Corporation uses an 11% target rate of return for new investment proposals.
Transcribed Image Text:What is the cash payback period for this proposal? (Round answer to 2 decimal places, e.g. 10.50.)
Cash payback period
(b)
What is the annual rate of return for the investment? (Round answer to 2 decimal places, e.g. 10.50.).
Annual rate of return for the investment
years.
Net present value
%
(c)
What is the net present value of the investment? (If the net present value is negative, use either a negative sign preceding the
number eg -45 or parentheses eg (45). Round answer to 0 decimal places, e.g. 125. For calculation purposes, use 5 decimal
places as displayed in the factor table provided.)
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