EX 16-35 (Algo) Payback Period; Even Cash Flows (Section 3) (LO 16-1, 16-6, 16-8) [The following information applies to the questions displayed below.] The management of Niagara National Bank is considering an investment in automatic teller machines. The machines would cost $149,500 and have a useful life of seven years. The bank's controller has estimated that the automatic teller machines will save the bank $32,500 after taxes during each year of their life (including the depreciation tax shield). The machines will have no salvage value. Use Appendix A for your reference. Note: Use appropriate factor(s) from the tables provided. X 16-35 (Algo) Part 2 Compute the net present value of the proposed investment. Compute the net present value of the proposed investment assuming an after-tax hurdle rate of (a) 10 percent, (b) 12 percent, and (c) percent. ote: Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. After-Tax Hurdle Rate a) 10 percent b) 12 percent c) 14 percent Net Present Value
EX 16-35 (Algo) Payback Period; Even Cash Flows (Section 3) (LO 16-1, 16-6, 16-8) [The following information applies to the questions displayed below.] The management of Niagara National Bank is considering an investment in automatic teller machines. The machines would cost $149,500 and have a useful life of seven years. The bank's controller has estimated that the automatic teller machines will save the bank $32,500 after taxes during each year of their life (including the depreciation tax shield). The machines will have no salvage value. Use Appendix A for your reference. Note: Use appropriate factor(s) from the tables provided. X 16-35 (Algo) Part 2 Compute the net present value of the proposed investment. Compute the net present value of the proposed investment assuming an after-tax hurdle rate of (a) 10 percent, (b) 12 percent, and (c) percent. ote: Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. After-Tax Hurdle Rate a) 10 percent b) 12 percent c) 14 percent Net Present Value
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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![EX 16-35 (Algo) Payback Period; Even Cash Flows (Section 3) (LO 16-1, 16-6, 16-8)
[The following information applies to the questions displayed below.]
The management of Niagara National Bank is considering an investment in automatic teller machines. The machines
would cost $149,500 and have a useful life of seven years. The bank's controller has estimated that the automatic teller
machines will save the bank $32,500 after taxes during each year of their life (including the depreciation tax shield). The
machines will have no salvage value.
Use Appendix A for your reference.
Note: Use appropriate factor(s) from the tables provided.
EX 16-35 (Algo) Part 2 Compute the net present value of the proposed investment.
2. Compute the net present value of the proposed investment assuming an after-tax hurdle rate of (a) 10 percent, (b) 12 percent, and (c)
14 percent.
Note: Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.
After-Tax Hurdle Rate
(a) 10 percent
(b) 12 percent
(c) 14 percent
Net Present
Value](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F788c9750-4103-4c3b-b72b-19af8b1755fd%2Fa2af7331-9219-4ca8-a8de-c14e4ba23545%2Ff2vqtp7_processed.jpeg&w=3840&q=75)
Transcribed Image Text:EX 16-35 (Algo) Payback Period; Even Cash Flows (Section 3) (LO 16-1, 16-6, 16-8)
[The following information applies to the questions displayed below.]
The management of Niagara National Bank is considering an investment in automatic teller machines. The machines
would cost $149,500 and have a useful life of seven years. The bank's controller has estimated that the automatic teller
machines will save the bank $32,500 after taxes during each year of their life (including the depreciation tax shield). The
machines will have no salvage value.
Use Appendix A for your reference.
Note: Use appropriate factor(s) from the tables provided.
EX 16-35 (Algo) Part 2 Compute the net present value of the proposed investment.
2. Compute the net present value of the proposed investment assuming an after-tax hurdle rate of (a) 10 percent, (b) 12 percent, and (c)
14 percent.
Note: Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.
After-Tax Hurdle Rate
(a) 10 percent
(b) 12 percent
(c) 14 percent
Net Present
Value
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