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 $352,000. The equipment has an estimated life of 10 years and no residual value. It is expected to provide yearly net cash flows of $44,000. The company's minimum desired rate of return for net present value analysis is 10%.

Year6%10%12%15%20%10.9430.9090.8930.8700.83321.8331.7361.6901.6261.52832.6732.4872.4022.2832.10643.4653.1703.0372.8552.58954.2123.7913.6053.3532.99164.9174.3554.1113.7853.32675.5824.8684.5644.1603.60586.2105.3354.9684.4873.83796.8025.7595.3284.7724.031107.3606.1455.6505.0194.192

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. fill in the blank 1 of 1%

b. The cash payback period.

2 years3 years4 years5 years6 years7 years8 years

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.

Line Item DescriptionAmountPresent value of annual net cash flows$fill in the blank 3Amount to be invested$fill in the blank 4Net present value$fill in the blank 5