Question
Eastern Cola is considering the purchase of a special-purpose bottling machine for $35,000. It is expected to have a useful life of four years with
Eastern Cola is considering the purchase of a special-purpose bottling machine for $35,000. It is expected to have a useful life of four years with no terminal disposal value. The plant manager estimates the following Savings in cash operating cost. Year one $15,000, year two $11,000, your three $10,000, year for $8,000, totaling $44,000.
Calculate the following for the special-purpose bottling machine.
First The Net Present Value,
2nd the payback.,
3rd the discount payback.,
4th the internal rate of return using the interpolation method,
fifth accrual accounting rate of return based on net initial investment assume straight-line depreciation. Use the average annual Savings in cash operating cost when Computing the numerator of the accrual accounting rate of return.
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