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EX 1 6 - 3 5 ( Algo ) Payback Period; Even Cash Flows ( Section 3 ) ( LO 1 6 - 1 ,

EX 16-35(Algo) Payback Period; Even Cash Flows (Section 3)(LO 16-1,16-6,16-8)
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The management of Niagara National Bank is considering an investment in automatic teller machines. The machines would cost $149,500 and have a useful life of seven years. The bank's controller has estimated that the automatic teller machines will save the bank $32,500 after taxes during each year of their life (including the depreciation tax shield). The machines will have no salvage value.
Use Appendix A for your reference.
Note: Use appropriate factor(s) from the tables provided.
16-35(Algo) Part 2 Compute the net present value of the proposed investment.
2. Compute the net present value of the proposed investment assuming an after-tax hurdle rate of (a)10 percent, (b)12 percent, and (C)4 percent.
Note: Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.
\table[[After-Tax Hurdle Rate,\table[[Net Present],[Value]]],[(a)10 percent,],[(b)12 percent,],[(c)14 percent,]]
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