America Cola is considering the purchase of a special-purpose bottling machine for $72,000. It is expected to have a useful life of 4 years with no terminal disposal value. The plant manager estimates the following savings in cash operating costs: Year Amount 1 $25,000 2 24,000 3 22,000 4 23,000 Total $94,000 America Cola uses a required rate of return of 16% in its capital budgeting decisions. Ignore income taxes in your analysis. Assume all cash flows occur at year-end except for initial investment amounts.

Required: Calculate the following for the special-purpose bottling machine: 1. Net present value 2. Payback period 3. Discounted payback period 4. Accrual accounting rate of return based on net initial investment (Assume straight-line depreciation. Use the average annual savings in cash operating costs when computing the numerator of the accrual accounting rate of return.)