a taxpaying entity, estimates that it can savea year in cash operating costs for the nextyears if it buys a special-purpose eye-testing machine at a cost of . No terminal disposal value is expected.required rate of return is %. Assume all cash flows occur at year-end except for initial investment amounts.uses straight-line depreciation. The income tax rate isfor all transactions that affect income taxes.

Lincoln Research, a taxpaying entity, estimates that it can save $23,000 a year in cash operating costs for the next 8 years if it buys a special-purpose eye-testing machine at a cost of $90,000. No terminal disposal value is expected. Lincoln Research's required rate of return is 12%. Assume all cash flows occur at year-end except for initial investment amounts. Lincoln Research uses straight-line depreciation. The income tax rate is 28% for all transactions that affect income taxes. Present Value of $1 table Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table Read the requirements i Requirements - X Requirement 1. Calcula a. Net present value (NF les for a negative net present value.) The net present value is 1. Calculate the following for the special-purpose eye-testing machine: a. Net present value b. Payback period c. Internal rate of return . Accrual accounting rate of return based on net initial investment e. Accrual accounting rate of return based on average investment 2. How would your computations in requirement 1 be affected if the special-purpose machine had a $9,000 terminal disposal value at the end of 8 years? Assume depreciation deductions are based on the $90,000 purchase cost and zero terminal disposal value using the straight-line method. Answer briefly in words without further calculations. Print Done