City Hospital, a taxpaying entity, estimate that it can save $33,000 a year in cash operating costs for the next years it it buys a special purpose eye-testing machine at a cost of $140,000. No terminal disposal value is expected. City Hospital's required rule of return is 10%. Assume all cash flows occur at year-end except for initial investment amounts. City Hospital uses straight-line depreciation. The income tax rate is 31% for all transactions that affect income taxes Present Value of $1 table Present Value of Annuity of $1 table Future Value of 1 table Future Value of Annuilty of S1 table Read the mouirements Requirement 1. Calodato the following for the special purpose eye testing machine a. Net present value (NPR) (Round interim calculations and your firal answers to the nearest whole dollar. Use a minus sign or parentheses for a negative not present value.) The nel present value is b. Payback period (Round your answer to two decimal place) The number of years for the payback period is c.Internal rate of return (Round the rate to two decimal places, XX%) The intemal rate of retum (IRR) d. Accrual accounting rate of return based on net initial investment (Round interim calculations to the nearest whole dolar. Round the rute to two decimal places, XXX%) Based on the netinal investment, the accrual accounting rate of rebum (AAR) ..Accrual accounting rate of retum based on average Investment (Round interim calculations to the nearest whole dollar. Round the rate to two decimal places, X.XX%) Based on average investment, the scorul counting rate of retum (AAR) Requirement 2. How would your computations in requirement 1 be affected the special purpose machine had a $10,000 terminal disposal value at the end of 8 years? Assume depreciation deductions are based on Choose from any list or enter any number in the input fields and then continue to the next question ? Save for Read the requirements c. Internal rate of retur (Round the rate to two decimal places, X.XX%) The Internal rate of retum (IRR) % d. Accrual accounting rate of retum based on net initial investment (Round interim calculations to the nearest whole dollar. Round the rate to two decimal places, X.XX%) Based on the net initial investment, the accrual accounting rate of return (AARR) is %. c. Accrual accounting rate of retum based on average Investment (Round interim calculations to the nearest whole dollar. Round the rate to two decimal places, X.XX%) Based on average Investment, the accrual accounting rate of reburn (AARR) is Requirement 2. How would your computations in requirement 1 be affected if the special purpose machine had a $10,000 terminal disposal value at the end of 8 years? Assume depreciation deductions are base the $140,000 purchase cost and zero terminal disposal value using the straight-line method. Answer briefly in words without further calculations NPV would Payback would IRR would AARR would under the method because the disposal value because the disposal value because the disposal value because the disposal value Choose from any list or enter any number in the input fields and then continue to the next question Save for Later MacBook Pro RO $ 4 % 5 A 6 & 7 3 8 9 Q E R Y U P e. Accrual accounting rate of return based on average investment (Round interim calculations to the nearest whole dollar. Round the rate to two dec Based on average investment, the accrual accounting rate of return (AARR) is %. Requirement 2. How would your computations in requirement 1 be affected if the special-purpose machine had a $10,000 terminal disposal van the $140,000 purchase cost and zero terminal disposal value using the straight-line method. Answer briefly in words without further calculations. because the disposal value NPV would Payback would IRR would decrease Increase AARR would not change under either methos cause the disposal value cause the disposal value cause the disposal value Choose from any list or enter any number in the input fields and then continue to the next question. Save for Later MacBook Pro esc 80 # 3 ATA % 5 6 7 e. Accrual accounting rate of return based on average investment (Round interim calculations to the nearest whole dollar. Round the rate to two decimal place Based on average investment, the accrual accounting rate of return (AARR) is Requirement 2. How would your computations in requirement 1 be affected if the special purpose machine had a $10,000 terminal disposal value at the the $140,000 purchase cost and zero terminal disposal value using the straight-line method. Answer briefly in words without further calculations. NPV would because the disposal value Payback would because the disposal value IRR would because the disposal value does not affect average annual operating income. does not affect the net initial investment. AARR would because the disposal value results in a decrease in average annual operating income. under either method. results in a decrease to the net initial investment. results in an increase in average annual operating income Choose from any list or enter any number in the input field results in an increase in the total present value of cash inflows. results in an increase to the net initial investment. Save for Later MacBook Pro 2 3 $ 4 % 5 6 7 Q W E R