no idea with question 4

Cumulative Initial Investment Yet to Be Year Cash Savings Cash Savings Recovered at End of Year 0 23,000 1 10,000 10,000 13,00 2 8,000 18,000 5,000 3 6000 Payback period = 2 + (5000l6000) = 2.83 years T 3. From requirement 1, the net present value is negative with a 16% required rate of return. Therefore, the internal rate of return must be less than 16%. P.V. P.V. P.V. Cash Factor at 14% Factor at 12% Factor at 10% Year Savings at 14% (4) = at 12% {6} = at 10% (8) = (1) (2) {3) (2) X (3) {5) (2) x {5) {19 (2} x (7) 1 $10,000 0.877 $ 8,770 0.893 $ 8,930 0.909 $ 9,090 2 8,000 0.769 6,152 0.797 6,376 0.826 6,608 3 6,000 0.675 4,050 0.712 4,272 0.751 4,506 4 5,000 0.592 2,960 0.636 3,180 0.683 3,415 $21,932 $22,758 $23,619 Net present value at 14% = $21,932 $23,000 = $(1,068) Net present value at 12% = $22,758 $23,000 = $(242) Net present value at 10% = $23,619 $23,000 = $619 10% + i (2%) 619 + 242 = 10% + (0.719) (2%) = 11.44% Internal rate of return 4. Accrual accounting rate of return based on net initial investment: Average annual savings in cash operating costs 29,000/4 = 7,250 Annual straight-line depreciation Accrual accounting rate of return 20-20 Capital budgeting with uneven cash flows, no income taxes. Southern Cola is considering the L purchase of a special-purpose bottling machine for $23,000. It is expected to have a useful life of four years 1. Pre with no terminal disposal value. The plant manager estimates the following savings in cash operating costs: cash Year Amount A W N - $10,000 8,000 6,000 5,000 Total $29,000 Southern Cola uses a required rate of return of 16% in its capital budgeting decisions. Ignore income taxes in your analysis. Assume all cash flows occur at year-end except for initial investment amounts. Required Calculate the following for the special-purpose bottling machine: 1. Net present value. 2. Payback periodRequired Calculate the following for the special-purpose bottling machine: 1. Net present value. 2. Payback period. 3. Internal rate of return. 4. Accrual accounting rate of return based on net initial investment. (Assume straight-line depreciation. Use tile average annual savings in cash operating costs when computing the numerator ofthe accrual accounting rate of return.) 10,000 * 0.862 8620 8,000 * 0,743 5944 6000 *0.641 3846 5000 * 0.552 2,760 Present value of savings in cash operating costs 21,170 Net initial investment (23,000) Net present value (1830) D