a.The average rate of return, giving effect to straight-line depreciation on the investment. If required, round your answer to one decimal place.

%

b.The cash payback period.

c.The net present value. Use the above table of thepresent value of an annuityof $1. Round to the nearest dollar. If required, use a minus sign to indicate negative net present value for current grading purpose.

Present value of annual net cash flows$Amount to be invested$Net present value

Average Rate of Return, Cash Payback Period, Net Present Value Method for a Service Company Spanish Peaks Railroad Inc. is considering acquiring equipment at a cost of $360,000. The equipment has an estimated life of 10 years and no residual value. It is expected to provide yearly net cash ows of $45,000. 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 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.8?0 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.6?3 2.48? 2.402 2.283 2.106 4 3.465 3.1?0 3.03? 2.855 2.589 5 4.212 3.?91 3.605 3.353 2.991 6 4.91? 4.355 4.111 3.?85 3.326 I" 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.48? 3.83? 9 6.802 5.?59 5.328 4.??2 4.031 10' 2.360 6.145 5.650 5.019 4.192 Compute the following: a. The average rate of return, giving effect to straightline depreciation on the investment. If required, round your answer to one decimal place. i: % b. The cash payback period. a. The average rate of return, giving effect to straightline depreciation on the investment. If required, round your answer to one decimal place. I: \"5% h. 'lhe cash payback period. v 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 net present value for current grading purpose. Present value of annual net cash ows 9;: Amount to be invested 95: Net present value 95