Oriole Company is considering a capital investment of $196,000 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 life of the investment, annual net income and net annual cash flows are expected to be $13,034 and $49,000, respectively. Oriole has a 12% cost of capital rate, which is the required rate of return on the investment.
Oriole Company is considering a capital investment of $196,000 in additional productive facilities. The new machinery is expected to have a useful life of 5 years with no salvage value.
Compute the cash payback period. (Round answer to 2 decimal places, e.g. 10.50.)
| Cash payback period | enter the cash payback period in years rounded to 2 decimal places years |
Compute the annual rate of return on the proposed capital expenditure. (Round answer to 2 decimal places, e.g. 10.52%.)
| Annual rate of return | enter the annual rate of return in percentages rounded to 2 decimal places % |
Using the discounted cash flow technique, compute the
| Net present value | $enter the net present value in dollars rounded to 0 decimal places |
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