P9-7 Net Present Value, Internal Rate of Return, Payback, Accounting Rate of Return, and Taxes [LO 2, 3, 4, 6] Adrian Sonnetson, the owner of Adrian Motors, is considering the addition of a paint and body shop to his automobile dealership. Construction of a building and the purchase of necessary equipment is estimated to cost $800,000 and both the building and equipment will be depreciated over 10 years using the straight-line method. The building and equipment have zero estimated residual value at the end of 10 years. Sonnetsons required rate of return for this project is 12 percent. Net income related to each year of the investment is as follows: Revenue $500,000 Less: Material cost 70,000 Labor 150,000 Depreciation 80,000 Other 10,000 Income before taxes 190,000 Taxes at 40% 76,000 Net income $114,000 Determine the net present value of the investment in the paint and body shop. (Round the present value factor calculations to 4 decimal places, e.g. 0.2525. Round all other calculations the final answer to 2 decimal places, e.g. 25.21.) Net present value = $ ___________ Should Sonnetson invest in the paint and body shop? No or Yes Calculate the internal rate of return of the investment (approximate). (Round the present value factor calculations to 4 decimal places, e.g. 0.2525. Round your final answer to 0 decimal places, e.g. 10%.) Internal rate of return = % Calculate the payback period of the investment. (Round the answer to 1 decimal place, e.g. 25.1.) Payback period years Calculate the accounting rate of return. (Round the answer to 0 decimal places, e.g. 10%.) Accounting rate of return = % AE10-15 Flexible Budget [LO 2,3] Expected manufacturing costs for Imperial Data Devices are as follows: Variable Costs Fixed Costs per Month Direct material $7.50/unit Supervisory salaries $21,000 Direct labor 4.00/unit Factory depreciation 11,000 Variable overhead 1.90/unit Other factory costs 3,300 Estimate manufacturing costs for production levels of 13,000 units, 16,000 units, and 18,500 units per month. 13,000 units $ __________ 16,000 units $ ___________ 18,500 units $ ____________