44)

Average rate of Return, Cash Payback period, Net Present Value Method B-Coastal Rafroad Inc is considering acquiring equipment at a cost of $536,000. The equipment has an estimated life of 10 years and no residual value. It is expected to provide yearly net cash flows of $67,000. The company's minimum desired rate of return for net present value analysis is 15% Present Value of an Annuity of $1 at Compound Interest Year 10% 129 15 20% 1 0.94 0.909 0.893 0.870 0.833 2 1.736 1.690 1.626 1.528 3 2.673 2.482 2.402 2.283 2.105 4 3.465 3.170 3,037 2.855 2.589 5 4212 3.791 3.605 3353 2.991 4917 4.355 4.111 3.785 3.326 2 4.160 3 5.35 4.968 3.837 5.30 5.328 4.772 4,031 10 5.019 4.192 3.505 Thereftum, assuming the annual earnings are equal to the net cash flows less the annual depreciation expense on the equipment. If required, round you to domace bove of the way of 51. Round to the nearest dollar. If required, use a minus sign to indicate negative net b. The cash payback period. c. The net present value. Use the above table of the present value of an annuity of $1. Round to the nearest dollar. If required, use a minus sign to indicate negative et present value for current grading purpose Present value of annual net cash flows Less amount to be invested Net present value