Comparison of Approaches to Capital Budgeting The Gehrig Company estimates that it can save $2,800 a year in cash operating costs for the next ten years if it buys a special-purpose machine at a cost of $11,000. No residual value is expected. The company’s minimum desired rate of return is 14 percent.

(Round all computations to the nearest dollar. Ignore income taxes.) Compute:

. Payback period

. Using discounted cash flow:

a. Internal rate of return

b. Net present value

. Payback reciprocal L01