Drake Corporation is reviewing an investment proposal. The initial cost is $106,400. Estimates of the book value of the investment at the end of each year, the net cash flows for each year, and the net income for each year are presented in the schedule below. All cash flows are assumed to take place at the end of the year. The salvage value of the investment at the end of each year is assumed to equal its book value. There would be no salvage value at the end of the investment's life. Drake Corporation uses an 11% target rate of return for new investment proposals. Click here to view the factor table. (a) What is the cash payback period for this proposal? (Round answer to 2 decimal places, e.8. 10.50.) Cash payback period years (b) What is the annual rate of return for the investment? (Round answer to 2 decimal places, e.s. 10.50\%.) Annual rate of return for the investment % Drake Corporation uses an 11% target rate of return for new investment proposals. Click here to view the factor table. (a) What is the cash payback period for this proposal? (Round answer to 2 decimal places, e.g. 10.50.) Cash payback period years (b) What is the annual rate of return for the investment? (Round answer to 2 decimal places, e.s. 10.50\%.) Annual rate of return for the investment % (c) What is the net present value of the investment? (If the net present value is negative, use either a negative sign preceding the number e.s. -45 or parentheses es (45). Round answer to 0 decimal places, e.s. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Net present value $ TABLE 1 Future Value of 1 \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|} \hline (n) & & & & & & & & & & \\ \hline Periods & 4% & 5% & 68 & 7% & 8% & 9% & 10% & 11% & 12% & 15% \\ \hline 0 & 1.00000 & 1.00000 & 1.00000 & 1.00000 & 1.00000 & 1.00000 & 1.00000 & 1.00000 & 1.00000 & 1.00000 \\ \hline 1 & 1.04000 & 1.05000 & 1.06000 & 1.07000 & 1.08000 & 1.09000 & 1.10000 & 1.11000 & 1.12000 & 1.15000 \\ \hline 2 & 1.08160 & 1.10250 & 1.12360 & 1.14490 & 1.16640 & 1.18810 & 1.21000 & 1.23210 & 1.25440 & 1.32250 \\ \hline 3 & 1.12486 & 1.15763 & 1.19102 & 1.22504 & 1.25971 & 1.29503 & 1.33100 & 1.36763 & 1.40493 & 152088 \\ \hline 4 & 1.16956 & 1.21551 & 1.26248 & 1.31080 & 1.36049 & 1.41158 & 1.46410 & 1.51807 & 1.57352 & 1.74901 \\ \hline 5 & 121665 & 1.27628 & 1.33823 & 1.40255 & 1.46933 & 1.53862 & 1.61051 & 1.68506 & 1.76234 & 2.01136 \\ \hline 6 & 126532 & 1.34010 & 1.41852 & 1.50073 & 1.58687 & 1.67710 & 1.77156 & 1.87041 & 1.97382 & 2.31306 \\ \hline 7 & 1.31593 & 1.40710 & 1.50363 & 1.60578 & 1.71382 & 1.82804 & 1.94872 & 2.07616 & 68 & 002 \\ \hline 8 & 1.36857 & 1.47746 & 1.59385 & 1.71819 & 1.85093 & 1.99256 & 2.14359 & 2.30454 & 2,47596 & 5902 \\ \hline 9 & 1.42331 & 1.55133 & 1.68948 & 1.83846 & 1.99900 & 2.17189 & 2.35795 & 255803 & 2.77308 & 3.51788 \\ \hline 10 & 1.48024 & 1,62889 & 1.79085 & 1.96715 & 2.15892 & 2.36736 & 2.59374 & 2.83942 & 3,10585 & 4.04556 \\ \hline 11 & 1.53945 & 1.71034 & 1.89830 & 2.10485 & 2.33164 & 2.58043 & 2.85312 & 3,15176 & 3,47855 & 4.65239 \\ \hline 12 & 1.60103 & 1.79586 & 2,01220 & 2.25219 & 2.51817 & 2.81267 & 3.13843 & 3.49845 & 3.89598 & 5.35025 \\ \hline 13 & 1.66507 & 1.88565 & 2.13293 & 2.40985 & 2.71962 & 3.06581 & 3.45227 & 3.88328 & 4.36349 & 6.15279 \\ \hline 14 & 1.73168 & 1.97993 & 2.26090 & 2.57853 & 2.93719 & 3.34173 & 3.79750 & \begin{tabular}{l} 3.30326 \\ 4.31044 \end{tabular} & 4.88711 & 7.07571 \\ \hline is & 1.80094 & 2,07893 & 2.39656 & 2,75903 & 3.17217 & 3.64248 & 4.17725 & 4.78459 & 5.47357 & 8.13706 \\ \hline 16 & 1.87298 & 2.18287 & 2,54035 & 2.95216 & 3.42594 & 3.97031 & 4.59497 & 5.31089 & 6.13039 & 9.35762 \\ \hline 17 & 1.94790 & 2.29202 & 2.69277 & 3.15882 & 3,70002 & 4,32763 & 5.05447 & 5.89509 & 6.86604 & 10.76126 \\ \hline 18 & 2.02582 & 2.40662 & 2,85434 & 3.37993 & 3.99602 & 4.71712 & 5.55992 & 6.54355 & 7.68997 & 12.37545 \\ \hline 19 & 2.10685 & 2.52695 & 3.02560 & 3.61653 & 4.31570 & 5.14166 & 6.11591 & 7.26334 & 8.61276 & 14.23177 \\ \hline 20 & 2,19112 & 2.65330 & 3.20714 & 3.86968 & 4.66096 & 5,60441 & 6.72750 & 8.06231 & 9.64629 & 16.36654 \\ \hline \end{tabular} TABLE 2 Future Value of an Annuity of 1 \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|} \hline \begin{tabular}{c} (n) \\ Payments \end{tabular} & 4% & 5% & 6% & 7% & 8% & 9% & 10% & 11% & 12% & 15% \\ \hline 1 & 1.00000 & 1.00000 & 1.00000 & 1.0000 & 1,00000 & 1.00000 & 1.00000 & 1.00000 & 1.00000 & 1.00000 \\ \hline 2 & 2.04000 & 2.05000 & 2.06000 & 2.0700 & 2.08000 & 2.09000 & 2.10000 & 2.11000 & 2.12000 & 2.15000 \\ \hline 3 & 3.12160 & 3.15250 & 3.18360 & 3.2149 & 3.24640 & 3.27810 & 3.31000 & 3.34210 & 3.37440 & 3.47250 \\ \hline 4 & 4.24646 & 4.31013 & 4.37462 & 4.4399 & 4.50611 & 4.57313 & 4,64100 & 4.70973 & 4.77933 & 4.99338 \\ \hline 5 & 5.41632 & 5.52563 & 5.63709 & 5.7507 & 5.86660 & 5.98471 & 6.10510 & 6.22780 & 6.35285 & 6.74238 \\ \hline 6 & 6.63298 & 6.80191 & 6.97532 & 7.1533 & 7.33592 & 7.52334 & 7.71561 & 7.91286 & 8.11519 & 8.75374 \\ \hline 7 & 7.89829 & 8.14201 & 8,39384 & 8.6540 & 8.92280 & 9.20044 & 9.48717 & 9.78327 & 10.08901 & 11.06680 \\ \hline 8 & 9.21423 & 9.54911 & 9.89747 & 10.2598 & 10.63663 & 11.02847 & 11.43589 & 11.85943 & 12.29969 & 13,72682 \\ \hline 9 & 10.58280 & 11.02656 & 11.49132 & 11.9780 & 12.48756 & 13.02104 & 13.57948 & 14.16397 & 14.77566 & 16,78584 \\ \hline 10 & 12.00611 & 12.57789 & 13.18079 & 13.8164 & 14.48656 & 15.19293 & 15.93743 & 16.72201 & 17.54874 & 20.30372 \\ \hline 11 & 13.48635 & 14.20679 & 14.97164 & 15.7836 & 16.64549 & 17,56029 & 18.53117 & \begin{tabular}{l} 19.56143 \\ 22.71319 \end{tabular} & \begin{tabular}{l} 20.65458 \\ 24.13313 \end{tabular} & 24.34928 \\ \hline 12 & 15,02581 & 15.91713 & 16.86994 & 17.8885 & 18.97713 & 20.14072 & 21.38428 & \begin{tabular}{l} 22.71319 \\ 26.21164 \end{tabular} & \begin{tabular}{l} 24.13313 \\ 28.02911 \end{tabular} & \begin{tabular}{l} 29,00167 \\ 34.35192 \end{tabular} \\ \hline 13 & 16.62684 & 17.71298 & 18.88214 & 20.1406 & 21.49530 & 22.95339 & \begin{tabular}{l} 24.52271 \\ 2797498 \end{tabular} & \begin{tabular}{l} 26,21164 \\ 30.09492 \end{tabular} & \begin{tabular}{l} 28.02911 \\ 32.39260 \end{tabular} & \begin{tabular}{l} 34.35192 \\ 40.50471 \end{tabular} \\ \hline 14 & 18.29191 & 19.59863 & \begin{tabular}{l} 21.01507 \\ 23.27597 \end{tabular} & \begin{tabular}{l} 22.5505 \\ 25.1290 \end{tabular} & \begin{tabular}{l} 24.21492 \\ 27.15211 \end{tabular} & \begin{tabular}{l} 26.01919 \\ 29.36092 \end{tabular} & \begin{tabular}{l} 27.97498 \\ 31.77248 \end{tabular} & \begin{tabular}{l} 30.09492 \\ 34.40536 \end{tabular} & 37.27972 & 47.58041 \\ \hline \begin{tabular}{l} 15 \\ 16 \end{tabular} & 20.02359 & \begin{tabular}{l} 21.57856 \\ 23.65749 \end{tabular} & \begin{tabular}{l} 23.27597 \\ 25.67253 \end{tabular} & 27.8881 & 30.32428 & 33.00340 & 35.94973 & 39.18995 & 42.75328 & 55.71747 \\ \hline \begin{tabular}{l} 16 \\ 17 \end{tabular} & \begin{tabular}{l} 21.82453 \\ 23.69751 \end{tabular} & \begin{tabular}{l} 23.65749 \\ 25.84037 \end{tabular} & \begin{tabular}{l} 25.67253 \\ 28.21288 \end{tabular} & 30.8402 & 33.75023 & 36.97351 & 40.54470 & 44.50084 & 48,88367 & 65.07509 \\ \hline \begin{tabular}{l} 17 \\ 18 \end{tabular} & \begin{tabular}{l} 23.69751 \\ 25.64541 \end{tabular} & \begin{tabular}{l} 25.84037 \\ 28.13238 \end{tabular} & 30.90565 & 33.9990 & 37.45024 & 41.30134 & 45.59917 & 50.39593 & 55.74972 & 75,83636 \\ \hline \begin{tabular}{l} 18 \\ 19 \end{tabular} & \begin{tabular}{l} 25.64541 \\ 27.67123 \end{tabular} & 30.53900 & 33.75999 & 37.3790 & 41.44626 & 46.01846 & 51.15909 & 56.93949 & 63.43968 & 88.21181 \\ \hline 19 & \begin{tabular}{l} 27.67123 \\ 29.77808 \end{tabular} & 33.06595 & 36.78559 & 40.9955 & 45.76196 & 51.16012 & 57.27500 & 64.20283 & 72.05244 & 102.44358 \\ \hline \end{tabular} TABLE 3 Present Value of 1 \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|} \hline \multicolumn{11}{|l|}{\begin{tabular}{c} (n) \\ Periods \\ \end{tabular}} \\ \hline1Periods & 961544% & 5% & 6% & 7% & 8% & 95: & 10% & 11% & 12% & 15% \\ \hline21 & \begin{tabular}{l} 96154 \\ 92456 \end{tabular} & \begin{tabular}{l} 95238 \\ 90703 \end{tabular} & 94340 & 0.93458 & 92593 & .91743 & 90909 & 90090 & 89286 & 86957 \\ \hline 2 & 92456 & 90703 & .89000 & 0.87344 & .85734 & 84168 & 82645 & 81162 & .79719 & 75614 \\ \hline 3 & 88900 & .86384 & 83962 & 0.81630 & .79383 & 77218 & .75132 & .73119 & .71178 & .05752 \\ \hline 4 & 85480 & 82270 & .79209 & 0.76290 & .73503 & .70843 & 68301 & .65873 & 63552 & 57175 \\ \hline 5 & .82193 & .78353 & .74726 & 0.71299 & 68058 & 64993 & .62092 & .59345 & 56743 & 49718 \\ \hline 6 & .79031 & .74622 & .70496 & 0.66634 & .63017 & 59627 & 56447 & 53464 & 50663 & 43233 \\ \hline 7 & .75992 & 71068 & .66506 & 0.62275 & .58349 & .54703 & 51316 & 48166 & 45235 & 37594 \\ \hline 8 & .73069 & .67684 & .62741 & 0.58201 & .54027 & 50187 & .46651 & 43393 & 40385 & 32690 \\ \hline 9 & .70259 & .64461 & .59190 & 0.54393 & 50025 & 46043 & 42410 & 39092 & 36061 & 28426 \\ \hline 10 & .67556 & .61391 & .55839 & 0.50835 & 46319 & 42241 & 38554 & .35218 & 32197 & 24719 \\ \hline 11 & 64958 & 58468 & 52679 & 0.47509 & 42888 & 38753 & 35049 & 31728 & 28748 & 21494 \\ \hline 12 & .02460 & 55684 & 49697 & 0.44401 & 39711 & 35554 & 31863 & 28584 & 25668 & 18691 \\ \hline 13 & .60057 & 53032 & 46884 & 0.41496 & 36770 & 32618 & 28966 & 25751 & 22917 & .16253 \\ \hline 14 & $7748 & 50507 & 44230 & 0.38782 & 34046 & 29925 & .26333 & 23199 & 20462 & .14133 \\ \hline 15 & 55526 & 48102 & .41727 & 0,36245 & 31524 & 27454 & 23939 & 20900 & .18270 & 12289 \\ \hline 16 & 53391 & 45811 & 39365 & 0.33873 & 29189 & 25187 & 21763 & .18829 & .16312 & 10687 \\ \hline 17 & 51337 & .43630 & 37136 & 0.31657 & 27027 & .23107 & 19785 & .16963 & 14564 & 09293 \\ \hline 18 & .49363 & 41552 & 35034 & 0,29586 & 25025 & 21199 & .17986 & .15282 & 13004 & .05081 \\ \hline 19 & 47464 & 39573 & 33051 & 0.27615 & 23171 & .19449 & .16351 & .13768 & .11611 & .07027 \\ \hline 20 & .45639 & 37689 & .31180 & 0.25842 & 21455 & 17843 & .14864 & .12403 & .10367 & 06110 \\ \hline \end{tabular} TABLE 4 Present Value of an Annuity of 1 \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|} \hline (n) & & & & & & & & & & \\ \hline Payments & 4% & 5% & 6% & 7% & 8% & 9% & 10% & 11% & 12% & 1556 \\ \hline 1 & 96154 & .95238 & .94340 & 0.93458 & 92593 & 91743 & 90909 & 90090 & 89286 & 86957 \\ \hline 2 & 1.88609 & 1.85941 & 1.83339 & 1.80802 & 1.78326 & 1.75911 & 1.73554 & 1.71252 & 1.69005 & 1.62571 \\ \hline 3 & 2.77509 & 2.72325 & 2.67301 & 262432 & 2.57710 & 2.53130 & 2.48685 & 2.4371 & 2.40183 & 228323 \\ \hline 4 & 3.62990 & 3.54595 & 3.46511 & 3.38721 & 3.31213 & 3.23972 & 3.16986 & 3.10245 & 3,03735 & 2.85496 \\ \hline 5 & 4.45182 & 4.32948 & 4.21236 & 4.10020 & 399271 & 3.88965 & 3.79079 & 3.69590 & 3. 60478 & 335216 \\ \hline 6 & 524214 & 5.07569 & 4.91732 & 4.76654 & 4.62288 & 4.48592 & 4,35526 & 4.23054 & 4.11141 & 3.78448 \\ \hline 7 & 6.00205 & 5,78637 & 5.58238 & 5,38929 & 5.20637 & 5.03295 & 4.86842 & 4.71220 & 4.56376 & 4.16042 \\ \hline 8 & 6.73274 & 6.46321 & 6.20979 & 5,97130 & 5.74664 & 5.53482 & 5.33493 & 5.14612 & 4.96764 & 4.48732 \\ \hline 9 & 7,43533 & 7.10782 & 6.80169 & 6.51523 & 6.24689 & 5.99525 & 5.75902 & 5.53705 & 532825 & 4.77158 \\ \hline 10 & 8.11090 & 7.72173 & 736009 & 7.02358 & 6.71008 & 6.41766 & 6.14457 & 5.85923 & 5.65022 & 5.01877 \\ \hline 11 & 8.76048 & 8.30641 & 7.88687 & 7.49867 & 7.13896 & 6.80519 & 6.49506 & 6.20652 & 5.93770 & 5.23371 \\ \hline 12 & 9.38507 & 8.86325 & 8.38384 & 794269 & 753608 & 7.16073 & 6.81369 & 6.49236 & 6.19437 & 3.42062 \\ \hline 13 & 9.98565 & 939357 & 8.85268 & 8.35765 & 790378 & 7.48690 & 7,10336 & 6.74937 & 6.4355 & 5.58315 \\ \hline 14 & 10.56312 & 989864 & 929498 & 8.74547 & 8.24424 & 7.78615 & 736669 & 6.98187 & 602817 & 5,72448 \\ \hline 15 & 11.11839 & 1037966 & 9.71225 & 9.10791 & 8.55948 & 8.06069 & 7.60608 & 7.19087 & 6.81086 & 584737 \\ \hline 16 & 11.65230 & 10.83777 & 10.10590 & 9.44665 & 8.85137 & 831256 & 782371 & 7.37916 & 6097399 & 5.95424 \\ \hline 17 & 12.16567 & 11.27407 & 10.47726 & 9.76322 & 9.12164 & 8.54363 & 8.02155 & 754879 & 7,11963 & 6.04716 \\ \hline 18 & 12.65930 & 11.68959 & 10.82760 & 10.05909 & 937189 & 8.75563 & 820141 & 7.70162 & 7.24967 & 6.12797 \\ \hline 19 & 13.13394 & 1208532 & 11.15812 & 10.33560 & 9.60360 & 8.95012 & 8.36492 & 783929 & 736578 & 6.19823 \\ \hline 20 & 13.59033 & 12.46221 & 11.46992 & 10.59401 & 981815 & 9.12855 & 851356 & 7.96333 & 2.46944 & 6.25933 \\ \hline \end{tabular} Linkin Corporation is considering purchasing a new delivery truck. The truck has many advantages over the company's current truck (not the least of which is that it runs). The new truck would cost $55,250. Because of the increased capacity, reduced maintenance costs, and increased fuel economy, the new truck is expected to generate cost savings of $8,500. At the end of 8 years, the company will sell the truck for an estimated $27,000. Traditionally the company has used a rule of thumb that a proposal should not be accepted unless it has a payback period that is less than 50% of the asset's estimated useful life, Larry Newton, a new manager, has suggested that the company should not rely solely on the payback approach, but should also employ the net present value method when evaluating new projects. The company's cost of capital is 8%. Click here to view the factor table. (a) Compute the cash payback period and net present value of the proposed investment. (If the net present value is negative, use either a negative sign preceding the number eg .45 or parentheses es (45). Round answer for present value to 0 decimal places, e.g. 125. Round answer for Payback period to 1 decimal place, e.g. 10.5. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Cash payback period years Net present value $