IV. Remington Company is considering the purchase of some equipment.

• The initial investment or cost will be $250,000.

• The annual savings in cash operating costs are $80,000.

• The estimated useful life of the equipment will be 5 years, at which point it will have a $10,000 terminal salvage value.

• The company has a minimum desired rate of return of 14%.

Required: Compute the following: (10 pts.)

(1) The Payback Period.

(2) The Net Present Value.

(3) The Accounting Rate of Return.

(4) Indicate whether Remington Company should purchase the equipment. Explain why.