Eastern Cola is considering the purchase of a special-purpose bottling machine for $45,000. It is expected to have a useful life of 4 years with no terminal disposal value. The plant manager estimates the following savings in cash operating costs: Eastern Cola uses a required rate of return of 16% in its capital budgeting decisions. Ignore income taxes in your analysis. Assume all cash flows occur at year-end except for initial investment amounts. Present Value of $1 table Present Value of Annuity of $1 table Future Value of $1 table

Future Value of Annuity of $1 table Year Amount

Year 1 $20,000.00

Year 2 14,000

Year 3 13,000

Year 4 12,000

Total $59,000.00

Requirements:

1. Net present value. (Use factor amounts rounded to three decimal places. Round your answers to the nearest whole dollar. Use a minus sign or parentheses for a negative net present value.) The net present value is Calculate the following for the special purpose bottling machine:

2. Payback period

3. Discounted payback period

4. Internal rate of return (using the interpolation method)

5. Accrual accounting rate of return based on net initial investment (Assume straight-line depreciation. Use the average annual savings in cash operating costs when computing the numerator of the accrual accounting rate of return.)