Comparison of approaches to capital budgeting. GTA Financial Services estimates that it can save $20,000 a year

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Comparison of approaches to capital budgeting. GTA Financial Services estimates that it can save $20,000 a year in cash operating costs for the next 10 years if it redesigns the layout of its office at a cost of $60,000. A zero terminal disposal price is expected. GTA’s required rate of return is 12%.

2. Discount factor, 5.650 REQUIRED 1. Compute the payback period.

2. Compute the net present value.

3. Compute the internal rate of return.

4. Compute the accrual accounting rate of return based on net initial investment. Assume straight-line amortization.

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Cost Accounting A Managerial Emphasis

ISBN: 9780135004937

5th Canadian Edition

Authors: Charles T. Horngren, Foster George, Srikand M. Datar, Maureen P. Gowing

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