Cole Electronics is considering investing in manufacturing equipment expected to cost $350,000. The equipment has an estimated useful life of four years and a salvage value of $ 22,000. It is expected to produce incremental cash revenues of $175,000 per year. Cole has an effective income tax rate of 30 percent and a desired rate of return of 12 percent. (PV of $1 and PVA of $1)

a.

Determine the net present value and tThe present value index of the investment, assuming that Cole uses straight-line depreciation for financial and income tax reporting need net present value Present value index B. Determine the net present value and the present value index of the investment, assuming that Cole uses double-declining-balance depreciation for financial and income tax reporting

Need net present value

Present value index

d.	Determine the payback period and unadjusted rate of return (use average investment), assuming that Cole uses straight-line depreciation need pay back period years unadjusted rate of returns %

e. Determine the payback period and unadjusted rate of return (use average investment), assuming that Cole uses double-declining-balance depreciation. (Note: Use average annual cash flow when computing the payback period and average annual income when determining the unadjusted rate of return.) need payback period unadjusted rate of return years %