Vaughn was presented with a second capital investment that provided similar production facilities as the first one. This investment cost \( \$ 395,000 \), had a useful life of 7 years with a salvage value of \( \$ 16,000 \). 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 \(\$ 23,838 \) and \(\$ 79,000 V) respectively. Vaughn's \( 7 \%\) cost of capital is also the required rate of return on the investment. Compute the cash payback period. (Round answer to 0 decimal places, e.s. 25.) Cash payback period yearsUsing the discounted cash flow technique, compute the net present value.
Vaughn was presented with a second capital investment that provided similar production facilities as the first one. This investment cost \( \$ 395,000 \), had a useful life of 7 years with a salvage value of \( \$ 16,000 \). 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 \(\$ 23,838 \) and \(\$ 79,000 V) respectively. Vaughn's \( 7 \%\) cost of capital is also the required rate of return on the investment. Compute the cash payback period. (Round answer to 0 decimal places, e.s. 25.) Cash payback period yearsUsing the discounted cash flow technique, compute the net present value.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Vaughn was presented with a second capital investment that provided similar production
facilities as the first one. This investment cost \( \$ 395,000 \), had a useful life of 7 years with a
salvage value of \(\$ 16,000 \). 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 \( \$ 23,838 \)
and \(\$ 79,000 V) respectively. Vaughn's \( 7 \% \) cost of capital is also the required rate of
return on the investment. Compute the cash payback period. (Round answer to 0 decimal
places, e.s. 25.) Cash payback period years Using the discounted cash flow technique, compute
the net present value.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbfbce359-e0c2-41bf-b1fc-85d1fd285cdd%2F5ac1dee7-b307-44c4-816c-f3887b18f8d9%2F1gy9eac_processed.png&w=3840&q=75)
Transcribed Image Text:Vaughn was presented with a second capital investment that provided similar production
facilities as the first one. This investment cost \( \$ 395,000 \), had a useful life of 7 years with a
salvage value of \(\$ 16,000 \). 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 \( \$ 23,838 \)
and \(\$ 79,000 V) respectively. Vaughn's \( 7 \% \) cost of capital is also the required rate of
return on the investment. Compute the cash payback period. (Round answer to 0 decimal
places, e.s. 25.) Cash payback period years Using the discounted cash flow technique, compute
the net present value.
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