Current Attempt in Progress Vilas Company is considering a capital investment of $211,200 in additional productive facilities. The new machinery is expected to have a useful life of 5 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 $12,672 and $48,000, respectively. Vilas has a 12% cost of capital rate, which is the required rate of return on the investment. (a) Compute the cash payback period. (Round answer to 1 decimal place, e.g. 10.5.) Cash payback period years Compute the annual rate of return on the proposed capital expenditure. (Round answer to 2 decimal places, e.g. 10.52%.) Annual rate of return % (b) Using the discounted cash flow technique, compute the net present value. (If the net present value is negative, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round answer for present value to 0 decimal places, e.g. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Net present value TABLE 3 Present Value of 1 (n) Periods 5% 6% 9% 11% 8% .92593 1 2 4% .96154 .92456 .88900 .85480 .82193 .95238 .90703 .86384 .82270 .78353 7% .93458 .87344 .81630 .76290 .71299 .94340 .89000 .83962 .79209 .74726 .85734 .79383 .73503 .68058 3 10% .90909 .82645 .75132 .68301 .62092 .91743 .84168 .77218 .70843 .64993 12% .89286 .79719 .71178 .63552 .56743 .90090 .81162 .73119 .65873 .59345 15% .86957 .75614 .65752 .57175 .49718 4 5 .53464 .48166 .50663 45235 .43233 37594 .79031 .75992 .73069 .70259 .74622 .71068 .67684 .64461 .61391 .70496 .66506 .62741 .59190 .55839 .66634 .62275 .58201 .54393 .50835 .63017 .58349 .54027 .50025 46319 .59627 .54703 .50187 46043 42241 .56447 .51316 46651 42410 .38554 .43393 39092 40388 .36061 .32197 .32690 .28426 .24719 10 .67556 .35218 11 12 13 o o o o ovo .64958 .62460 .60057 .57748 .55526 .58468 .55684 .53032 .50507 48102 .52679 49697 .46884 44230 .41727 .47509 44401 41496 .38782 .36245 42888 .39711 .36770 .34046 .31524 .38753 .35554 .32618 .29925 .27454 .35049 .31863 .28966 .26333 .23939 .31728 .28584 25751 .23199 .20900 .28748 .25668 .22917 20462 .18270 .21494 .18691 .16253 .14133 .12289 14 15 16 .18829 .16963 17 18 .53391 .51337 49363 .47464 .45639 .45811 43630 41552 .39573 37689 .39365 .37136 .35034 .33051 .31180 .33873 .31657 .29586 27615 .25842 .29189 27027 .25025 .23171 .21455 .25187 .23107 .21199 .19449 .17843 .21763 .19785 . 17986 .16351 .14864 .16312 .14564 .13004 .11611 10367 .15282 .13768 .12403 .10687 .09293 .08081 .07027 .06110 19 20 When using Table 3, the future value is multiplied by the present value factor specified at the intersection of the number of periods and the discount rate. | TABLE 2 Future Value of an Annuity of 1 m Payments 1 2 4% 1.00000 2.04000 3.12160 4.24646 5.41632 5% 1.00000 2.05000 3.15250 4.31013 5.52563 6% 1.00000 2.06000 3.18360 4.37462 5.63709 7% 1.0000 2.0700 3.2149 4.4399 5.7507 8% 1.00000 2.08000 3.24640 4.50611 5.86660 9% 1.00000 2.09000 3.27810 4.57313 5.98471 10% 1.00000 2.10000 3.31000 4.64100 6.10510 11% 1.00000 2.11000 3.34210 4.70973 6.22780 12% 1.00000 2.12000 3.37440 4.77933 6.35285 15% 1.00000 2.15000 3.47250 4.99338 6.74238 3 4 5 7.33592 7.91286 6 7 8 9n 6.63298 7.89829 9.21423 10.58280 12.00611 6.80191 8.14201 9.54911 11.02656 12.57789 6.97532 8.39384 9.89747 11.49132 13.18079 7.1533 8.6540 10.2598 11.9780 13.8164 8.92280 10.63663 12.48756 14.48656 7.52334 9.20044 11.02847 13.02104 15.19293 7.71561 9.48717 11.43589 13.57948 15.93743 9.78327 11.85943 14.16397 16.72201 8.11519 10.08901 12.29969 14.77566 17.54874 8.75374 11.06680 13.72682 16.78584 20.30372 10 11 12 13 13.48635 15.02581 16.62684 18.29191 20.02359 14.20679 15.91713 17.71298 19.59863 21.57856 14.97164 16.86994 18.88214 21.01507 23.27597 15.7836 17.8885 20.1406 22.5505 25.1290 16.64549 18.97713 21.49530 24.21492 27.15211 17.56029 20.14072 22.95339 26.01919 29.36092 18.53117 21.38428 24.52271 27.97498 31.77248 19.56143 22.71319 26.21164 30.09492 34.40536 20.65458 24.13313 28.02911 32.39260 37.27972 24.34928 29.00167 34.35192 40.50471 47.58041 14 15 T2846BM899 16 17 21.82453 23.69751 25.64541 27.67123 29.77808 18 23.65749 25.84037 28.13238 30.53900 33.06595 25.67253 28.21288 30.90565 33.75999 36.78559 27.8881 30.8402 33.9990 30.32428 33.75023 37.45024 41.44626 45.76196 33.00340 36.97351 41.30134 46.01846 51.16012 35.94973 40.54470 45.59917 51.15909 57.27500 39.18995 44.50084 50.39593 56.93949 64.20283 42.75328 48.88367 55.74972 63.43968 72.05244 55.71747 65.07509 75.83636 88.21181 102.44358 19 20 37.3790 40.9955 TABLE 1 Future Value of 1 7% Periods 0 1 2 3 4 5 4% 1.00000 1.04000 1.08160 1.12486 1.16986 1.21665 5% 1.00000 1.05000 1.10250 1.15763 1.21551 1.27628 6% 1.00000 1.06000 1.12360 1.19102 1.26248 1.33823 1.00000 1.07000 1.14490 1.22504 1.31080 1.40255 8% 1.00000 1.08000 1.16640 1.25971 1.36049 1.46933 9% 1.00000 1.09000 1.18810 1.29503 1.41158 1.53862 10% 1.00000 1.10000 1.21000 1.33100 1.46410 1.61051 11% 1.00000 1.11000 1.23210 1.36763 1.51807 1.68506 12% 1.00000 1.12000 1.25440 1.40493 1.57352 1.76234 15% 1.00000 1.15000 1.32250 1.52088 1.74901 2.01136 6 7 8 1.26532 1.31593 1.36857 1.42331 1.48024 1.34010 1.40710 1.47746 1.55133 1.62889 1.41852 1.50363 1.59385 1.68948 1.79085 1.50073 1.60578 1.71819 1.83846 1.96715 1.58687 1.71382 1.85093 1.99900 2.15892 1.67710 1.82804 1.99256 2.17189 2.36736 1.77156 1.94872 2.14359 2.35795 2.59374 1.87041 2.07616 2.30454 2.55803 2.83942 1.97382 2.21068 2.47596 2.77308 3.10585 2.31306 2.66002 3.05902 3.51788 4.04556 9 10 11 2.10485 12 13 1.53945 1.60103 1.66507 1.73168 1.80094 1.71034 1.79586 1.88565 1.97993 2.07893 1.89830 2.01220 2.13293 2.26090 2.39656 2.25219 2.40985 2.57853 2.75903 2.33164 2.51817 2.71962 2.93719 3.17217 2.58043 2.81267 3.06581 3.34173 3.64248 2.85312 3.13843 3.45227 3.79750 4.17725 3.15176 3.49845 3.88328 4.31044 4.78459 3.47855 3.89598 4.36349 4.88711 5.47357 4.65239 5.35025 6.15279 7.07571 8.13706 14 15 16 2.54035 17 1.87298 1.94790 2.02582 2.10685 2.19112 18 2.18287 2.29202 2.40662 2.52695 2.65330 2.95216 3.15882 3.37993 2.69277 2.85434 3.02560 3.20714 3.42594 3.70002 3.99602 4.31570 4.66096 3.97031 4.32763 4.71712 5.14166 5.60441 4.59497 5.05447 5.55992 6.11591 6.72750 5.31089 5.89509 6.54355 7.26334 8.06231 6.13039 6.86604 7.68997 8.61276 9.64629 9.35762 10.76126 12.37545 14.23177 16.36654 19 20 3.61653 3.86968 TABLE 4 Present Value of an Annuity of 1 6% 8% (n) Payments 1 2 2 3 .94340 1.83339 4% .96154 1.88609 2.77509 3.62990 4.45182 5% .95238 1.85941 2.72325 3.54595 4.32948 7% .93458 1.80802 2.62432 3.38721 4.10020 9% .91743 1.75911 2.53130 3.23972 3.88965 .92593 1.78326 2.57710 3.31213 3.99271 10% .90909 1.73554 2.48685 3.16986 3.79079 11% .90090 1.71252 2.44371 3.10245 3.69590 12% .89286 1.69005 2.40183 3.03735 3.60478 15% .86957 1.62571 2.28323 2.85498 3.35216 2.67301 3.46511 4.21236 4 5 6 7 4.35526 4.86842 5.24214 6.00205 6.73274 7.43533 5.07569 5.78637 6.46321 7.10782 4.91732 5.58238 6.20979 6.80169 4.76654 5.38929 5.97130 6.51523 4.62288 5.20637 5.74664 6.24689 4.48592 5.03295 5.53482 5.99525 4.23054 4.71220 5.14612 5.53705 4.11141 4.56376 4.96764 5.32825 3.78448 4.16042 4.48732 4.77158 8 5.33493 5.75902 9 10 11 12 8.11090 8.76048 9.38507 9.98565 10.56312 11.11839 7.72173 8.30641 8.86325 9.39357 9.89864 7.36009 7.88687 8.38384 8.85268 9.29498 9.71225 7.02358 7.49867 7.94269 8.35765 8.74547 9.10791 6.71008 7.13896 7.53608 7.90378 8.24424 8.55948 6.41766 6.80519 7.16073 7.48690 7.78615 8.06069 6.14457 6.49506 6.81369 7.10336 7.36669 7.60608 5.88923 6.20652 6.49236 6.74987 6.98187 7.19087 5.65022 5.93770 6.19437 6.42355 6.62817 6.81086 5.01877 5.23371 5.42062 5.58315 5.72448 5.84737 13 14 15 10.37966 16 8.85137 9.12164 17 11.65230 12.16567 12.65930 13.13394 13.59033 18 10.83777 11.27407 11.68959 12.08532 12.46221 10.10590 10.47726 10.82760 11.15812 11.46992 9.44665 9.76322 10.05909 10.33560 10.59401 8.31256 8.54363 8.75563 8.95012 9.12855 7.37916 7.54879 7.70162 7.83929 7.82371 8.02155 8.20141 8.36492 8.51356 9.37189 9.60360 9.81815 6.97399 7.11963 7.24967 7.36578 7.46944 5.95424 6.04716 6.12797 6.19823 6.25933 19 20 7.96333