=+18-19 KK Capital budgeting methods, no income taxes OBJECTIVES 1, 3, 5, 6 Homecare, a not-for-profit organisation that provides meals to the disadvantaged, estimates that it can save $14000 a year in cash operating costs for the next 7 years if it buys a special-purpose oven at a cost of $65000. No terminal disposal value is expected.

The required rate of return is 6%. Assume all cash flows occur at year-end except for initial investment amounts.

Required 1 Calculate the following for the special-purpose oven:

a net present value b payback period c internal rate of return d accrual accounting rate of return based on net initial investment (assume straight-line depreciation).