Carper Company is considering a capital investment of $361,200 in additional productive facilities. The new machinery is expected to have useful life of 6 years with no salvage value. Depreciation is by the straight-line method. During the life of the investment, annual net income and net annual cash flows are expected to be $18,060 and $86,000, respectively. Carper has an 8% cost of capital rate, which is the required rate of return on the investment.

(a1)

• Your Answer
• Correct Answer

Correct answer iconYour answer is correct.

Compute the cash payback period. (Round answer to 2 decimal places, e.g. 2.25.)

Cash payback period

years

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Solution

Attempts: 1 of 1 used

(a2)

• Your Answer
• Correct Answer

Correct answer iconYour answer is correct.

Compute the annual rate of return on the proposed capital expenditure. (Round answer to 2 decimal places, e.g. 2.25%.)

Annual rate of return

%

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Solution

Attempts: 1 of 1 used

(b)

Using the discounted cash flow technique, compute the net present value. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 2 decimal places e.g. 589.71.)

Net present value

$

Please show math for how you come up with discount flow technique NPV