=+18-18 KK Capital budgeting methods, no income taxes OBJECTIVES 1, 3, 5, 6 Staples Ltd runs stationery
Question:
=+18-18 KK Capital budgeting methods, no income taxes OBJECTIVES 1, 3, 5, 6 Staples Ltd runs stationery wholesale stores in Queensland. Staples’s management estimates that if it invests $275000 in a new computer system it can save $155000 in annual cash operating costs. The system has an expected useful life of three years and no terminal disposal value. The required rate of return is 8%. Ignore income tax issues in your answers. Assume all cash flows occur at year-end except for initial investment amounts.
Required 1 Calculate the following for the new computer system:
a net present value b payback period c internal rate of return d accrual accounting rate of return based on the net initial investment (assume straight-line depreciation).
Step by Step Answer:
Cost Accounting A Managerial Emphasis
ISBN: 9781442563377
2nd Edition
Authors: Monte Wynder, Madhav V. Rajan, Srikant M. Datar, Charles T. Horngren, William Maguire, Rebecca Tan