Comparison of approaches to capital budgeting. Oshawa Contractors is thinking of buy-

: ing, at a cost of $300,000, a new crane that is expected to save $80,000 in cash operating costs a Ee per year. Its estimated useful life is 10 years, and it will have zero terminal disposal price. ‘The required rate of return is 14%.

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.

LO1