Average rate of return, cash payback period, net present value method for a service company

The St$.$ Louis to Seattle Railroad is considering acquiring equipment at a cost of $$215,000.$ The equipment has an estimated life of $10$ years and no residual value. It

is expected to provide yearly net cash flows of $$43,000.$ The company's minimum desired rate of return for net present value analysis is $12\%.$

Present Value of an Annuity of $$1$ at Compound Interest

Compute the following:

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 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 flows s

Amount to be invested $

Net present value