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Plz solve the following using financial calculator 20-40 New equipment purchase, income taxes. Anna's Bakery plans to purchase a new oven with an estimated useful
Plz solve the following using financial calculator
20-40 New equipment purchase, income taxes. Anna's Bakery plans to purchase a new oven with an estimated useful life of four years. The estimated pretax cash flows for the oven are as shown in the table that follows, with no anticipated change in working capital. Anna's Bakery has a 12% after-tax required rate of return and a 40% income tax rate. Assume depreciation is calculated on a straight-line basis for account- ing purposes using the initial oven investment and estimated terminal disposal value of the oven. Assume all cash flows occur at year-end except for initial investment amounts. Equipment is subject to 20% CCA rate declining balance for income tax purposes. Relevant Cash Flows at End of Each Year 0 1 2 3 $(95,000) 4 Initial machine investment $36,000 $36,000 $36,000 $36,000 Annual cash flow from operations (excluding the depreciation effect) Cash flow from terminal disposal of oven 0 Required 1. Calculate (a) NPV, (b) payback period, and (c) IRR. 2. Compare and contrast the capital budgeting methods in requirement 1
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