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Sentinel Company is considering an investment in technology to improve its operations. The investment will require an initial outlay of $258,000 and will yield the following expected cash flows. Management requires investments to have a payback period of 2 years, and it requires a 8% return on investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the table provided.) 1 Period Cash Flow $ 47,000 2 53,200 3 76,100 95,600 125,900 4 5 Required: 1. Determine the payback period for this investment. 2. Determine the break-even time for this investment. 3. Determine the net present value for this investment. Complete this question by entering your answers in the tabs below. Required Required Required 1 2 3 Determine the payback period for this investment. (Enter cash outflows with a minus sign. Round your Payback Period answer to 1 decimal place.) Year Cash inflow (outflow) $ (258,000) Cumulative Net Cash Inflow (outflow) 0 1 0 0 2 3 4 5 0 0 0 Payback period = Determine the break-even time for this investment. (Enter cash outflows with a minus sign. Round your break-even time answer to 1 decimal place.) Present Cumulative Cash inflow Table Value of Present Year (outflow) factor Cash Value of Flows Cash Flows 0 $ (258,000) 1 2 3 4 5 0 0 0 O Break-even time = Required Required Required 1 2 3 Determine the net present value for this investment. Net present value Elegant Decor Company's management is trying to decide whether to eliminate Department 200, which has produced losses or low profits for several years. The company's 2017 departmental income statements shows the following. Combined $725,000 469,000 256,000 26,000 9,400 6,900 ELEGANT DECOR COMPANY Departmental Income Statements For Year Ended December 31, 2017 Dept. 100 Dept. 200 Sales $436,000 $289,000 Cost of goods sold 261,000 208,000 Gross profit 175,000 81,000 Operating expenses Direct expenses Advertising 15,000 11,000 Store supplies used 5,000 4,400 Depreciation-Store 4,000 2,900 equipment Total direct 24,000 18,300 expenses Allocated expenses Sales salaries 78,000 46,800 Rent expense 9,440 4,780 Bad debts expense 9,900 7,900 Office salary 15,600 10,400 Insurance expense 2,100 1,300 Miscellaneous office 2,100 1,400 expenses Total allocated 117,140 72,580 expenses Total expenses 141, 140 90,880 Net income (loss) $ 33, 860 $ (9,880) 42,300 124,800 14, 220 17,800 26,000 3,400 3,500 189,720 232,020 $ 23,980 In analyzing whether to eliminate Department 200, management considers the following: a. The company has one office worker who earns $500 per week, or $26,000 per year, and four sales clerks who each earn $600 per week, or $31,200 per year for each salesclerk. b. The full salaries of two salesclerks are charged to Department 100. The full salary of one salesclerk is charged to Department 200. The salary of the fourth clerk, who works half-time in both departments, is divided evenly between the two departments. c. Eliminating Department 200 would avoid the sales salaries and the office salary currently allocated to it. However, management prefers another plan. Two salesclerks have indicated that they will be quitting soon. Management believes that their work can be done by the other two clerks if the one office worker works in sales half-time. Eliminating Department 200 will allow this shift of duties. If this change is implemented, half the office worker's salary would be reported as sales salaries and half would be reported as office salary. d. The store building is rented under a long-term lease that cannot be changed. Therefore, Department 100 will use the space and equipment currently used by Department 200. e. Closing Department 200 will eliminate its expenses for advertising, bad debts, and store supplies; 66% of the insurance expense allocated to it to cover its merchandise inventory; and 25% of the miscellaneous office expenses presently allocated to it. 1. Complete the following report showing total expenses, expenses that would be eliminated by closing Department 200 and the expenses that would continue. The statement should reflect the reassignment of the office worker to one- half time as salesclerk. ELEGANT DECOR COMPANY Analysis of Expenses under Elimination of Department 200 Total Eliminated Continuing Expenses Expenses Expenses Direct expenses Allocated expenses Total expenses $ 0 $ 0 $ 0