Problem 10-5 Template 1. Payback peried 2. Unadjested rate of return Average amount of investment taxes Deduct annual depreciation (original outlay- salvage valac) Annual income (before income taes Deduct incone tax expense ( Average annsal net income from investmen useful lf anmual incomme before taves x tax rate A. Prefitability index Initial cash outlay Initial cash outlay t he ent value factor (12% mmmmm return on investment, 10 penods Present value of annual net cash inflow (round to nearest whole dollar Profitability index (2)+(1) Compute payback period (see #1: (Refer to period row that corresponds with the life of the proposal; use table A.4 since we're Sicp 3 Muliply the annual inflow by the PV factce Annual after-tax inflow Week # 13-Chapter 10 Hom ework Assignment Problem 1 (Textbook Reference: P10-5)-Rank proposals using the payback pe riod, unadjus ted rate of re turn proftability inde x, and time-adjus ted rate ofreturn MemyL Inc is considering three different investments involving depreciable assets with no salvage value. The following data rehte to these investments Initial Cash Outlay Expected Before- Tax Cash Inflow per lear Expected After- Tax Cash Inflow Life of Proposal (vears) 10 20 10 Investme nt per Year 140,000 S 240,000 S 360,000 S 37,333 S 72,000 S 89,333 S 28,000 48,000 68,000 The income tax rate is 40%. Management requires a minum return on investment of12%. Required: Rank these proposals using the following selection techniques. Round each answer two decimal places (1) Payback period rankings: a Payback period cakculation -Investment 1: b. Payback period cakculation - Investment 2 c. Payback period cakculation-Investment 3 (2) Unadjusted rate of return rankings: a. Unadjusted rate of return cakculation -Investment 1 b. Unadjusted rate of return caleulation-Investment 2 c. Unadjusted rate of return calculation - Investment 3: (3) Profitability index: a. Profitability index cakculation - Investment 1: b. Profitability index calculation - Investment 2 c. Profitability index calkulation-Investment 3: (4) Time-adjusted rate or return rakings: a. Unadjusted rate of return cakulation - Investment 1 b. Unadjusted rate of return calculation-Investment 2 c. Unadjusted rate of return cakculation -Investment 3 ***Template provided on next page**