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2. The capital investment committee of Fantasy Land Co. is currently considering purchasing a new hologram machine to create fictitious voters and has the following

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2. The capital investment committee of Fantasy Land Co. is currently considering purchasing a new hologram machine to create fictitious voters and has the following information: Purchase price $240,000 Residual value 40,000 Desired payback period 4 years Minimum rate of return 15% $ Estimated data for the investment is as follows: Projected Year Net Income Cash inflow Cash outflow 1 $ 46,000 $ 200,000 104,000 2 34,000 180,000 96,000 3 22,000 260,000 88,000 4 10,000 140,000 80.000 $ 112,000 780,000 368.000 1 co Instructions: Compute the Accounting rate of return. 6. Calculate the payback period in years & months c.Compute the net present value using factors from the tables listed below. [13 pts Year Present value of $1 to be received at the Present value of an Annuity of S1 received Each period for a given number of Time end of a given number of Time Periods Periods Year 12% 15% 20% 12 % 15% 20% 1 0.893 0.870 0.833 1 10.893 10.870 0.833 2 0.797 10.756 10.694 2 1.690 1.626 1.528 3 0.712 10.658 0.579 13 2.402 2.283 2.106 4 0.636 0.572 0.482 14 13.037 2.855 2.589 15 0.567 0.497 0.402 15 3.605 3.353 2.991 2. The capital investment committee of Fantasy Land Co. is currently considering purchasing a new hologram machine to create fictitious voters and has the following information: Purchase price $240,000 Residual value 40,000 Desired payback period 4 years Minimum rate of return 15% Estimated data for the investment is as follows: Projected Year Net Income Cash inflow 1 $ 46,000 $ 200.000 2 34,000 180,000 3 22,000 260,000 4 10,000 140,000 $ 112,000 780,000 Cash outflow $ 104,000 96,000 88,000 80,000 S 368,000 Instructions: a. Compute the Accounting rate of return. b. Calculate the payback period in years & months c. Compute the net present value using factors from the tables listed below. [13 pts)

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