ute annual rate of return, nayback period, and net at value. 2, 5), AP E24-10 Vilas Company is considering a capital investment of $190,000 in additional pro- ductive 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 $12,000 and Problems: Set A $50,000, respectively. Vilas has a 12% cost of capital rate, which is the required rate of return on the investment. Instructions (Round to two decimals.) (a) Compute (1) the cash payback period and (2) the annual rate of return on the pro- posed capital expenditure. (b) Using the discounted cash flow technique, compute the net present value.
ute annual rate of return, nayback period, and net at value. 2, 5), AP E24-10 Vilas Company is considering a capital investment of $190,000 in additional pro- ductive 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 $12,000 and Problems: Set A $50,000, respectively. Vilas has a 12% cost of capital rate, which is the required rate of return on the investment. Instructions (Round to two decimals.) (a) Compute (1) the cash payback period and (2) the annual rate of return on the pro- posed capital expenditure. (b) Using the discounted cash flow technique, compute the 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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please show calculation detail, thank you
Transcribed Image Text:pute annual rate of return,
payback period, and net
nt value.
E24-10 Vilas Company is considering a capital investment of $190,000 in additional pro-
ductive 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 $12,000 and
2, 5), AP
Problems: Set A 11
$50,000, respectively. Vilas has a 12% cost of capital rate, which is the required rate of
return on the investment.
Instructions
(Round to two decimals.)
(a) Compute (1) the cash payback period and (2) the annual rate of return on the pro-
posed capital expenditure.
(b) Using the discounted cash flow technique, compute the net present value.
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