Average Rate of Return, Cash Payback Period, Net Present Value Method Southwest Transportation Inc. is considering a distribution facility at a cost of $116,000. The facility has an estimated life of 10 years and a no residual value. It is expected to provide yearly net cash flows of $29,000. The company's minimum desired rate of return for net present value analysis is 10%. Click here to access the present value tables (Exhibit 2 and Exhibit 5) to use for this problem. a. Compute average rate of return, giving effect to straight-line depreciation on the investment. Round to one decimal place. % b. Compute the cash payback period. years c. Compute the net present value. If required, use the minus to indicate a negative net present value. Total present value of annual net cash flows Less: amount to be invested Equals: net present value Present Value of $1 at Compound Interest Exhibit 2 Partial Present Value of $1 Table Year 6% 12% 15% 20% 0.893 0.833 0.797 0.943 0.890 0.840 0.792 0.694 10% 0.909 0.826 0.751 0.683 0.621 0.564 0.870 0.756 0.658 0.712 0.636 0.572 0.747 0.567 0.497 0.579 0.482 0.402 0.335 0.279 0.233 0.507 0.432 0.513 0.452 0.376 0.705 0.665 0.627 0.592 0.467 0.404 0.327 0.424 0.194 0.361 0.322 0.284 0.247 0.558 0.386 0.162 Present Value of an Annuity of $1 at Compound Interest Exhibit 5 Partial Present Value of an Annuity Table Year 6% 20% 10% 0.909 0.943 12% 0.893 1.690 0.833 1.833 1.736 1.528 2.402 3.037 2.106 15% 0.870 1.626 2.283 2.855 3.353 3.785 2.673 3.465 4.212 4.917 5.582 2.589 2.487 3.170 3.791 4.355 4.868 3.605 2.991 4.111 3.326 3.605 4.564 4.160 4.968 4.487 3.837 6.210 6.802 7.360 5.335 5.759 6.145 5.328 4.772 4.031 4.192 5.650 5.019