BostonBoston

Cola is considering the purchase of a? special-purpose bottling machine for

$ 70 comma 000$70,000.

It is expected to have a useful life of

44

years with no terminal disposal value. The plant manager estimates the following savings in cash operating? costs:

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?(Click the icon to view the savings in cash operating? costs.)

BostonBoston

Cola uses a required rate of return of

2020?%

in its capital budgeting decisions. Ignore income taxes in your analysis. Assume all cash flows occur at? year-end except for initial investment amounts.Present Value of $1 table

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????Present Value of Annuity of $1 table

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?????Future Value of $1 table

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????Future Value of Annuity of $1 table

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Read the requirements.

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1. Net present value. ?(Use factor amounts rounded to three decimal places. Round your answers to the nearest whole dollar. Use a minus sign or parentheses for a negative net present?value.)

The net present value is $

(8,850)

.

2. Payback period. ?(Round your answer to two decimal? places.)

The payback period is

years.

Data Table:

Year		Amount
1		$30,000
2		25,000
3		20,000
4		15,000
Total		$90,000

Requirements:

Calculate the following for the special purpose bottling? machine:

1.	Net present value
2.	Payback period
3.	Discounted payback period
4.	Internal rate of return? (using the interpolation? method)
5.	Accrual accounting rate of return based on net initial investment? (Assume straight-line depreciation. Use the average annual savings in cash operating costs when computing the numerator of the accrual accounting rate of?return.)