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Capital Budgeting (10 points) Bandon Company is considering an investment proposal. The initial cost of the investment, the net cash flows for each year, and the net income for each year are presented below. There is no salvage value at the end of the investment's life. Year Initial Cost Annual Cash Flow Annual Net Income Bandon Company uses a 15% 0 $190,000 target rate of return for new 1 $56,000 $18,000 investment proposals. Answer 2 62,000 24,000 the following and Show your work. 3 59,000 21,000 4 60,000 22,000 58,000 20,000 5 Paragraph B IDEE E * I 1) What is the cash payback period for this proposal? (2 pts) 2) What is the average annual net income for this investment? (1 pt) 3) What is the annual rate of return for this investment? (2 pts) BE Paragraph BI EEN 1) What information is relevant to this decision? Indicate Yes or No. (2 pts) Relevant Y/N Sales Direct Labor Direct Materials Variable Selling & Admin Fixed Manufacturing Overhead Variable Manufacturing Overhead Fixed Selling & Admin 2) What is the amount of Selling and Admin expense that would be incurred for the special order? (2 pts) I 3) Prepare an incremental analysis table for whether or not to accept or reject the special order: (5 pts) Effect on Net Income Reject Accept Description MacBook Air ncurred for the special order? (2 pts) 3) Prepare an incremental analysis table for whether or not to accept or reject the special order: (5 pts) Description Reject Accept Effect on Net Income 4) Should Bandon Company accept the special order? (1 pt) I 4) What is the net present value of this investment? (4 pts) Year Amount Factor Present Value 5) What is your recommendation to Bandon Company regarding this investment? (1pt)