#11 i 6 Required information Saved Part 1 of 3 1.45 points Exercise 16-35 Payback Period; Even Cash Flows (Section 3) (LO 16-1, 16-6, 16-8) [The following information applies to the questions displayed below.] The management of Niagara National Bank is considering an investment in automatic teller machines. The machines would cost $156,400 and have a useful life of seven years. The bank's controller has estimated that the automatic teller machines will save the bank $34,000 after taxes during each year of their life (including the depreciation tax shield). The machines will have no salvage value. Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.) eBook References Exercise 16-35 Part 1 Required: 1. Compute the payback period for the proposed investment. (Round your answer to 1 decimal place.) Payback period 4.6 years 1 Required information Exercise 16-35 Payback Period; Even Cash Flows (Section 3) (LO 16-1, 16-6, 16-8) [The following information applies to the questions displayed below.] The management of Niagara National Bank is considering an investment in automatic teller machines. The machines would cost $156,400 and have a useful life of seven years. The bank's controller has estimated that the automatic teller machines will save the bank $34,000 after taxes during each year of their life (including the depreciation tax shield). The machines will have no salvage value. Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.) Exercise 16-35 Part 2 2. Compute the net present value of the proposed investment assuming an after-tax hurdle rate of (a) 10 percent, (b) 12 percent, and (c) 14 percent. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.) (a) 10 percent (b) 12 percent (c) 14 percent Net Present Value Required information Exercise 16-35 Payback Period; Even Cash Flows (Section 3) (LO 16-1, 16-6, 16-8) [The following information applies to the questions displayed below.] The management of Niagara National Bank is considering an investment in automatic teller machines. The machines would cost $156,400 and have a useful life of seven years. The bank's controller has estimated that the automatic teller machines will save the bank $34,000 after taxes during each year of their life (including the depreciation tax shield). The machines will have no salvage value. Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.) Exercise 16-35 Part 3 3. Which of the following statements are true? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.) ? The net-present-value method is preferable to the payback method. ? The payback method is preferable to the net-present-value method. The payback period criterion fails to account for the time value of money. ? If management uses the payback method, the investment will be approved only if the required payback period meets or exceeds the years calculated. ? The cut-off value for the payback period is very much dependent on the bank's hurdle rate. ? The cut-off value for the payback period has nothing to do with the bank's hurdle rate