Bryant Co. has obtained the following data about a possible planned investment:

Cost $270,000

Terminal salvage value in 8 years $10,000

Additional annual revenues for 8 years $250,000

Additional annual cash expenses for 8 years $200,000

Estimated useful life in years 8

Minimum desired rate of return 10%

Present value of ordinary annuity, 10%, 8 periods 5.3349

Present value of one, 10%, 8 periods 0.4665

The company uses straight-line depreciation method. Ignore income taxes.

REQUIRED:

A. Compute the net present value of the investment.

B. Based on your answer in (A), do you recommend this investment? Why?

C. Compute the payback period.

D. Compute the accounting rate of return using the initial required investment.