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Exercise 24-6 BSU Inc. wants to purchase a new machine for $41,100, excluding $1,500 of installation costs. The old machine was bought five years ago

Exercise 24-6 BSU Inc. wants to purchase a new machine for $41,100, excluding $1,500 of installation costs. The old machine was bought five years ago and had an expected economic life of 10 years without salvage value. This old machine now has a book value of $2,300, and BSU Inc. expects to sell it for that amount. The new machine would decrease operating costs by $9,800 each year of its economic life. The straight-line depreciation method would be used for the new machine, for a six-year period with no salvage value. Click here to view PV table. (a) Determine the cash payback period. (Round cash payback period to 1 decimal place, e.g. 10.5.) Cash payback period years (

b) Determine the approximate internal rate of return. (Round answer to 0 decimal places, e.g. 10. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Internal rate of return %

(c) Assuming the company has a required rate of return of 10%, determine whether the new machine should be purchased. The investment shouldshould not be accepted.

Table3Present Value of 1

(n) 4% 5% 6% 7% 8% 9% 10% 11% 12% 15%

Periods

1 0.96154 0.95238 0.9434 0.93458 0.92593 0.91743 0.90909 0.9009 0.89286 0.86957

2 0.92456 0.90703 0.89 0.87344 0.85734 0.84168 0.82645 0.81162 0.79719 0.75614

3 0.889 0.86384 0.83962 0.8163 0.79383 0.77218 0.75132 0.73119 0.71178 0.65752

4 0.8548 0.8227 0.79209 0.7629 0.73503 0.70843 0.68301 0.65873 0.63552 0.57175

5 0.82193 0.78353 0.74726 0.71299 0.68058 0.64993 0.62092 0.59345 0.56743 0.49718

6 0.79031 0.74622 0.70496 0.66634 0.63017 0.59627 0.56447 0.53464 0.50663 0.43233

7 0.75992 0.71068 0.66506 0.62275 0.58349 0.54703 0.51316 0.48166 0.45235 0.37594

8 0.73069 0.67684 0.62741 0.58201 0.54027 0.50187 0.46651 0.43393 0.40388 0.3269

9 0.70259 0.64461 0.5919 0.54393 0.50025 0.46043 0.4241 0.39092 0.36061 0.28426

10 0.67556 0.61391 0.55839 0.50835 0.46319 0.42241 0.38554 0.35218 0.32197 0.24719

11 0.64958 0.58468 0.52679 0.47509 0.42888 0.38753 0.35049 0.31728 0.28748 0.21494

12 0.6246 0.55684 0.49697 0.44401 0.39711 0.35554 0.31863 0.28584 0.25668 0.18691

13 0.60057 0.53032 0.46884 0.41496 0.3677 0.32618 0.28966 0.25751 0.22917 0.16253

14 0.57748 0.50507 0.4423 0.38782 0.34046 0.29925 0.26333 0.23199 0.20462 0.14133

15 0.55526 0.48102 0.41727 0.36245 0.31524 0.27454 0.23939 0.209 0.1827 0.12289

16 0.53391 0.45811 0.39365 0.33873 0.29189 0.25187 0.21763 0.18829 0.16312 0.10687

17 0.51337 0.4363 0.37136 0.31657 0.27027 0.23107 0.19785 0.16963 0.14564 0.09293

18 0.49363 0.41552 0.35034 0.29586 0.25025 0.21199 0.17986 0.15282 0.13004 0.08081

19 0.47464 0.39573 0.33051 0.27615 0.23171 0.19449 0.16351 0.13768 0.11611 0.07027

20 0.45639 0.37689 0.3118 0.25842 0.21455 0.17843 0.14864 0.12403 0.10367 0.0611

Table4Present Value of an Annuity of 1

(n) 4% 5% 6% 7% 8% 9% 10% 11% 12% 15%

Payments

1 .96154 .95238 .94340 .93458 .92593 .91743 .90909 .90090 .89286 .86957

2 1.88609 1.85941 1.83339 1.80802 1.78326 1.75911 1.73554 1.71252 1.69005 1.62571

3 2.77509 2.72325 2.67301 2.62432 2.5771 2.5313 2.48685 2.44371 2.40183 2.28323

4 3.62990 3.54595 3.46511 3.38721 3.31213 3.23972 3.16986 3.10245 3.03735 2.85498

5 4.45182 4.32948 4.21236 4.10020 3.99271 3.88965 3.79079 3.6959 3.60478 3.35216

6 5.24214 5.07569 4.91732 4.76654 4.62288 4.48592 4.35526 4.23054 4.11141 3.78448

7 6.00205 5.78637 5.58238 5.38929 5.20637 5.03295 4.86842 4.7122 4.56376 4.16042

8 6.73274 6.46321 6.20979 5.97130 5.74664 5.53482 5.33493 5.14612 4.96764 4.48732

9 7.43533 7.10782 6.80169 6.51523 6.24689 5.99525 5.75902 5.53705 5.32825 4.77158

10 8.11090 7.72173 7.36009 7.02358 6.71008 6.41766 6.14457 5.88923 5.65022 5.01877

11 8.76048 8.30641 7.88687 7.49867 7.13896 6.80519 6.49506 6.20652 5.9377 5.23371

12 9.38507 8.86325 8.38384 7.94269 7.53608 7.16073 6.81369 6.49236 6.19437 5.42062

13 9.98565 9.39357 8.85268 8.35765 7.90378 7.4869 7.10336 6.74987 6.42355 5.58315

14 10.56312 9.89864 9.29498 8.74547 8.24424 7.78615 7.36669 6.98187 6.62817 5.72448

15 11.11839 10.37966 9.71225 9.10791 8.55948 8.06069 7.60608 7.19087 6.81086 5.84737

16 11.6523 10.83777 10.1059 9.44665 8.85137 8.31256 7.82371 7.37916 6.97399 5.95424

17 12.16567 11.27407 10.47726 9.76322 9.12164 8.54363 8.02155 7.54879 7.11963 6.04716

18 12.6593 11.68959 10.8276 10.05909 9.37189 8.75563 8.20141 7.70162 7.24967 6.12797

19 13.13394 12.08532 11.15812 10.3356 9.6036 8.95012 8.36492 7.83929 7.36578 6.19823

20 13.59033 12.46221 11.46992 10.59401 9.81815 9.12855 8.51356 7.96333 7.46944
6.25933

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Table3Present Value of 1
(n)	4%	5%	6%	7%	8%	9%	10%	11%	12%	15%
Periods	4%	5%	6%	7%	8%	9%	10%	11%	12%	15%
1	0.96154	0.95238	0.9434	0.93458	0.92593	0.91743	0.90909	0.9009	0.89286	0.86957
2	0.92456	0.90703	0.89	0.87344	0.85734	0.84168	0.82645	0.81162	0.79719	0.75614
3	0.889	0.86384	0.83962	0.8163	0.79383	0.77218	0.75132	0.73119	0.71178	0.65752
4	0.8548	0.8227	0.79209	0.7629	0.73503	0.70843	0.68301	0.65873	0.63552	0.57175
5	0.82193	0.78353	0.74726	0.71299	0.68058	0.64993	0.62092	0.59345	0.56743	0.49718
6	0.79031	0.74622	0.70496	0.66634	0.63017	0.59627	0.56447	0.53464	0.50663	0.43233
7	0.75992	0.71068	0.66506	0.62275	0.58349	0.54703	0.51316	0.48166	0.45235	0.37594
8	0.73069	0.67684	0.62741	0.58201	0.54027	0.50187	0.46651	0.43393	0.40388	0.3269
9	0.70259	0.64461	0.5919	0.54393	0.50025	0.46043	0.4241	0.39092	0.36061	0.28426
10	0.67556	0.61391	0.55839	0.50835	0.46319	0.42241	0.38554	0.35218	0.32197	0.24719
11	0.64958	0.58468	0.52679	0.47509	0.42888	0.38753	0.35049	0.31728	0.28748	0.21494
12	0.6246	0.55684	0.49697	0.44401	0.39711	0.35554	0.31863	0.28584	0.25668	0.18691
13	0.60057	0.53032	0.46884	0.41496	0.3677	0.32618	0.28966	0.25751	0.22917	0.16253
14	0.57748	0.50507	0.4423	0.38782	0.34046	0.29925	0.26333	0.23199	0.20462	0.14133
15	0.55526	0.48102	0.41727	0.36245	0.31524	0.27454	0.23939	0.209	0.1827	0.12289
16	0.53391	0.45811	0.39365	0.33873	0.29189	0.25187	0.21763	0.18829	0.16312	0.10687
17	0.51337	0.4363	0.37136	0.31657	0.27027	0.23107	0.19785	0.16963	0.14564	0.09293
18	0.49363	0.41552	0.35034	0.29586	0.25025	0.21199	0.17986	0.15282	0.13004	0.08081
19	0.47464	0.39573	0.33051	0.27615	0.23171	0.19449	0.16351	0.13768	0.11611	0.07027
20	0.45639	0.37689	0.3118	0.25842	0.21455	0.17843	0.14864	0.12403	0.10367	0.0611



Table4Present Value of an Annuity of 1
(n)	4%	5%	6%	7%	8%	9%	10%	11%	12%	15%
Payments	4%	5%	6%	7%	8%	9%	10%	11%	12%	15%
1	.96154	.95238	.94340	.93458	.92593	.91743	.90909	.90090	.89286	.86957
2	1.88609	1.85941	1.83339	1.80802	1.78326	1.75911	1.73554	1.71252	1.69005	1.62571
3	2.77509	2.72325	2.67301	2.62432	2.5771	2.5313	2.48685	2.44371	2.40183	2.28323
4	3.62990	3.54595	3.46511	3.38721	3.31213	3.23972	3.16986	3.10245	3.03735	2.85498
5	4.45182	4.32948	4.21236	4.10020	3.99271	3.88965	3.79079	3.6959	3.60478	3.35216
6	5.24214	5.07569	4.91732	4.76654	4.62288	4.48592	4.35526	4.23054	4.11141	3.78448
7	6.00205	5.78637	5.58238	5.38929	5.20637	5.03295	4.86842	4.7122	4.56376	4.16042
8	6.73274	6.46321	6.20979	5.97130	5.74664	5.53482	5.33493	5.14612	4.96764	4.48732
9	7.43533	7.10782	6.80169	6.51523	6.24689	5.99525	5.75902	5.53705	5.32825	4.77158
10	8.11090	7.72173	7.36009	7.02358	6.71008	6.41766	6.14457	5.88923	5.65022	5.01877
11	8.76048	8.30641	7.88687	7.49867	7.13896	6.80519	6.49506	6.20652	5.9377	5.23371
12	9.38507	8.86325	8.38384	7.94269	7.53608	7.16073	6.81369	6.49236	6.19437	5.42062
13	9.98565	9.39357	8.85268	8.35765	7.90378	7.4869	7.10336	6.74987	6.42355	5.58315
14	10.56312	9.89864	9.29498	8.74547	8.24424	7.78615	7.36669	6.98187	6.62817	5.72448
15	11.11839	10.37966	9.71225	9.10791	8.55948	8.06069	7.60608	7.19087	6.81086	5.84737
16	11.6523	10.83777	10.1059	9.44665	8.85137	8.31256	7.82371	7.37916	6.97399	5.95424
17	12.16567	11.27407	10.47726	9.76322	9.12164	8.54363	8.02155	7.54879	7.11963	6.04716
18	12.6593	11.68959	10.8276	10.05909	9.37189	8.75563	8.20141	7.70162	7.24967	6.12797
19	13.13394	12.08532	11.15812	10.3356	9.6036	8.95012	8.36492	7.83929	7.36578	6.19823
20	13.59033	12.46221	11.46992	10.59401	9.81815	9.12855	8.51356	7.96333	7.46944	6.25933