ody) L6 1Cash Payback Perlod, Simple Rate of Return, NPV 3 Drake Corporation is reviewing an investment p 4 The initial cost and estimates of the book value of the investment at the end of cach year, the net cash s flows for each year, and the net income for each year are presented in the schedule below 6 All cash flows are assumed to take place at the end of the year. There would be no salvage value 7 at the end of the investment's life. ent- Thc Ozon Investment Proposal Initial Cost Annual Depreciation Net Cash nd Book Vale Net Income ExpERSA pense .ili Flow 120 131 $104,100 70,500 42.400 20,600 6,800 16,400 21,900 28,200 36,200 43,200 33,600 28,100 50,000 21,800 13,80050,000 $50,000 is i 164 17 18 19 Drake Corporation uses an 10% target rate of return (discount rate) for new investment proposals. 50,000 50,000 6,800 21 (e) What is the cash payback period for this proposal? 23 25 26 29 (b) What is the simple rate of return for the investment for each year? OPP ROR NPV+ 31 34 35 36 37 38 (e) What is the net present value of the investment? 39 40 41 42 43 45 46 47 48 (c 1) What is the net present value of the investment if there is a $15,000 49 disposal cost at the end of the asset's useful life? 50 51 52 56 57