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. 16 points Requirements: a. Determine the annual estimated net income and net cash inflow. b. Calculate the payback period c. Calculate the accounting rate of return. Alt. Exercise A a. Determine the annual estimated net income and net cash inflow. Accrual Net Income Fic Cash Inflows 320,000 Cash Outflows (200,000) (enter cash outflows as a negative amount) Depreciation (50,000) (enter the annual depreciation as a negative amount) Income before taxes 70,000 Income Tax (30%) (21,000) (Accrual income before taxes x 30%) lenter the income tax as a negative amount) Annual net income $ 49,000 Annual net cash flow for just 49,000 net income +50,000 depreciation) b. Payback period Cost of investment Annual net cash flow b. Payback period - Cost of investment Annual net cash flow Payback period 5.05 years $ $ 500,000 99,000 (round the number of years to 2 decimal place) 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 = 19.6% $ $ 49,000 250,000