Average rate of return$-$new productCash payback period for a service companyNet present value method for a service company

years. A driver will cost $$46,000$ in $20V1,$ with an expected annual salary increase of $$4,000$ for each year thereafter. The annual operating costs for the truck are estimated to be $$2,000$ per year.

Present Value of $$1$ at Compound Interest

a$.$ Determine the expected annual net cash flows from the delivery truck investment for $20$V$1-20$v$5.$

c$.$ Is the additional truck a good investment based on your analysis?

$2$ because the net present value is

Haukea Clothing Inc. is evaluating two capital investment proposals for a retail outlet, each requiring an investment of $$225,000$ and each with an eight$-$year life and expected total net cash flows of $$360,000.$

Location $1$ is expected to provide equal annual net cash flows of $$45,000,$ and Location $2$ is expected to have the following unequal annual net

Determine the cash payback period for both location proposals.

Location $1$

years

Location $2$

years

Oahu Inc. is considering an investment in new equipment that will be used to manufacture a smartphone. The phone is expected to generate additional annual sales of $6,700$ units at $$228$ per unit. The equipment

has a cost of $$623,100,$ residual value of $$46,900,$ and an $8-$year life. The equipment can only be used to manufacture the phone. The cost to manufacture the phone follows:

Determine the average rate of return on the equipment. If required, round to the nearest whole percent.

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