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Fabian Company is considering the purchase of a piece of materials-handling equipment: Net initial investment $125,000 Estimated Useful life 8 years Estimated terminal disposal price

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Fabian Company is considering the purchase of a piece of materials-handling equipment: Net initial investment $125,000 Estimated Useful life 8 years Estimated terminal disposal price $10,000 Estimated annual cash operating savings $35,000 Required rate of retum 10% Depreciation method: straight line Required: a) Net Present Value 2 marks b) Payback period 2 marks c) Discounted payback period 2 marks d) Internal rate of return 2 marks e) Accrual accounting rate of retum 2 marks Net Present Value with CCA Tax Shield 2 marks 9) Two qualitative factors to be considered other than the calculation from a) to f). 2 marks ** Plesae use the PV / FV table on eCentennial in your calculation **Show your work. Marks will not be awarded to anwer withou workings Total 14 marks

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