Bi-Coastal Railroad Inc. is considering acquiring equipment at a cost of $134,000. The equipment has an estimated life of 10 years and no residual value. It is expected to provide yearly net cash flows of $67,000. The companys minimum desired rate of return for net present value analysis is 12%.

4. EX.26-14.AL GO (Algorithmic) eBook Show Me How Average Rate of Return, Cash Payback Perlod, Net Present Value Method Bi-Coastal Railroad Inc. is considering acquiring equipment at a cost of $134,000. The equipment has an estimated life of 10 years and no residual value. It is expectad to provide yearly net cash flows of $67,000. 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 6o%o 0.943 1.833 2.673 3.465 Year 12% 0.893 1.690 2.402 3.037 4.212 3.791 3.605 3.353 2.991 10% 0.909 1.736 2.487 3.170 1596 0.870 1.626 2.283 2.855 20% 0.833 1.528 2.106 2.589 4.917 5.582 6.210 5.335 4.968 4.487 6.802 7.360 4.355 3.785 3.326 3.605 3.837 4.031 4.192 4.363 4.564 4.160 5.759 5.328 4.772 6.145 5.650 5.019 Compute the following: a. The average rate of return, assuming the annual earnings are equal to the net cash fiows less the annual depreciation expense on the equipment. If required, round your answer to one decimal place. b. The cash payback period years c. The net present value. Use the above table of the present value of an annulty of $1. Round to the nearest dollar. If requlred, use a minus slgn to Indlcate negative net present value" for current grading purpose Present value of annual net cash flows Less amount to be invested Net present value