Vaughn Company is considering a capital investment of $378,400 in additional productive facilities. The new machinery is expected tohave a useful life of 6 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 $18,920 and $86,000, respectively. Vaughn has an 7% cost of capitalrate, which is the required rate of return on the investment.(a1)Compute the cash payback period. (Round answer to 2 decimal places, e.g. 2.25.)Your answer is correct.Cash payback period(a2)eTextbook and Media(b)Your answer is correct.Annual rate of returnCompute the annual rate of return on the proposed capital expenditure. (Round answer to 2 decimal places, e.g. 2.25%.)eTextbook and Media4.4 yearsNet present value $10Attempts: 1 of 5 used%Attempts: 1 of 5 usedUsing the discounted cash flow technique, compute the net present value. (Round present value factor calculations to 5 decimalplaces, e.g. 1.25124 and the final answer to 2 decimal places e.g. 589.71.)

Net present value method : It is defined as the difference between the present value of cash inflows…

Answered: Using the discounted cash flow…

Using the discounted cash flow technique, compute the net present value. (Round present value factor calculations to places, e.g. 1.25124 and the final answer to 2 decimal places e.g. 589.71.)

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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