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Bluebonnet Inc. is considering the purchase of new equipment that will automate production and thus reduce labor costs. Bluebonnet made the following estimates related to
Bluebonnet Inc. is considering the purchase of new equipment that will automate production and thus reduce labor costs. Bluebonnet made the following estimates related to the new machinery (Click the icon to view the information.) Present Value of $1 table Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table Read the requirements, Requirement 1. Calculate (a) net present value, (b) payback period, (c) discounted payback period, and (d) internal rate of return. a. Net present value. (Round intermediary calculations to the nearest whole dollar. Use factors to three decimal places, X.XXX, and use a minus sign or parentheses for a negative net present value. Enter the net present value of the investment rounded to the nearest whole dollar.) The net prosent value is $ 0 Data Table i Requirements $107.000 $35,000 5 years 1. Calculate (a) net present value, (b) payback period, (c) discounted payback period, and (d) internal rate of return. 2. Compare and contrast the capital budgeting methods in requirement 1. Cost of the equipment Reduced labor costs Estimated life of the equipment Terminal disposal value After-tax cost of capital Tax rate $0 10 % 25 % Print Done Assume depreciation is calculated on a straight-line basis for tax purposes. Assume all cash flows occur at year-end except for initial investment amounts. Print Done
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