Cullumber Inc. wants to purchase a new machine for $31,420. excluding $1,300 of installation costs. The old machine was purchased 5 years ago and had an expected economic life of 10 years with no salvage value. The old machine has a book value of $2,200, and Cullumber Inc. expects to sell it for that amount. The new machine will decrease operating costs by $?.000 each year of its economic life. The straightline depreciation method will be used for the new machine for a 6year period with no salvage value. Click here to View the factor table. [a] Determine the cash payback period. (Round cash payback period to 2 decimal places. 9.3. 10.53.} Cash payback period years lb) Determine the approximate internal rate of retu rn. [Round answer to 0 decimal places. as. 13%. For caimlatfon purposes. use 5 decimal places as displayed in the factor table provided.) Internal rate of return '36 lei Assumingthe company has a required rate of return of 8%, determinewhether the new machine should be purchased. The investment V be accepted. eTextbook and Media Save for La tcr Attempts: 0 Of 3 used Submit Ansx-n-'er Blossom Oil Company is considering investing in a new oil well. It is expected that the oil well will increase annual revenues by $120,215 and will increase annual expenses by $65,000 including depreciation. The oil well will cost $400,000 and will have a $9,000 salvage value at the end of its 10year useful life. Calculate the annual rate of return. (Round answer to Odedrml places. 23.13%} Annual rate of return '36 eTextbook and Media Savc- for Later Attempts: 0 of 3 used Cullumber's Hair Salon is considering opening a new location in French Lick, California. The cost of building a new salon is $280,000. A new salon will normally generate annual revenues of $67,975, with annual expenses (including depreciation) of $41,200. At the end of 15 years, the salon will have a salvage value of $77,000. Calculate the annual rate of return on the project. Annual rate of return % eTextbook and Media Save for Later Attempts: 0 of 3 used Submit AnswerSandhill Company is considering three long-term capital investment proposals. Each investment has a useful life of 5 years. Relevant data on each project are as follows. Project Bono Project Edge Project Clayton Capital investment $160,000 $182,000 $204,000 Annual net income: Year 1 14,420 18,540 27.810 2 14,420 17,510 23,690 3 14,420 16,480 21,630 A 14,420 12,360 13,390 5 14,420 9.270 12,360 Total $72,100 $74,160 $98,880 Depreciation is computed by the straight-line method with no salvage value. The company's cost of capital is 15%. (Assume that cash flows occur evenly throughout the year.) Click here to view the factor table. Compute the cash payback period for each project. (Round answers to 2 decimal places, e.g. 10.50.) Project Bono years Project Edge years Project Clayton years eTextbook and Media Compute the net present value for each project. (Round answers to O decimal places, e.g. 125. If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Project Bono Project Edge Project Clayton Net present value $ $ $ eTextbook and Media Compute the annual rate of return for each project. (Hint: Use average annual net income in your computation.) (Round answers to 2 decimal places, e.g. 10.50%.) Project Bono Project Edge Project Clayton Annual rate of return % % % eTextbook and Media Rank the projects on each of the foregoing bases. Which project do you recommend? Net Annual Project Cash Payback Present Value Rate of Return Bono Edge Clayton The best project is V eTextbook and Media