Carper was presented with a second capital investment that provided similar production facilities as the first one. This investment cost $395,000, had a useful life of 7 years with a salvage value of $16,000. 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 $23,838 and $79,000 respectively. Carpers 7% cost of capital is also the required rate of return on the investment. Compute the cash payback period. (Round answer to 0 decimal places, e.g. 25.)

Cash payback period

years

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Solution

Attempts: 2 of 2 used

(c2)

• Your Answer
• Correct Answer (Used)

Compute the annual rate of return. (Round answer to 2 decimal places, e.g. 15.25%.)

Annual rate of return

%

(c3)

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.)