Alternate Exercise A: Diane Manufacturing Company is considering investing $500,000 in new equipment with an estimated useful life of 10 years and no salvage value. The equipment is expected to produce $320,000 in cash inflows and $200,000 in cash outflows annually. The company uses straight-line depreciation, and has a 30% tax rate. 3 Requirements: 5 a. Determine the annual estimated net income and net cash inflow. 5 b. Calculate the payback period 7 c. Calculate the accounting rate of return 3 Alt. Exercise A 0 1 2 a. Determine the annual estimated net income and net cash inflow. 3 Accrual 4 Net Income Cash Flow 5 Cash Inflows 6 Cash Outflows (enter cash outflows as a negative amount) 7 Depreciation (enter the annual depreciation as a negative amount) 9 Income before taxes O Income Tax (30%) (Accrual income before taxes x 30%) (enter the i 1 Annual net income 2 Annual net cash flow (or just 49,000 net income + 50,000 depreciation) b. Payback period = 24 5 :6 27 Cost of investment Annual net cash flow Payback period 11 years (round the nu c. Accounting (or unadjusted) Rate of Return = Annual after-tax net income Annual average investment Avg investment = (Beg. Book Value + End. Book Value)/2 Accounting (Unadjusted) Rate of return =