Question $2$

Dorothy & George Company is planning to acquire a new machine at a total cost of $$30,600.$ The

machine's estimated life is six years and its estimated salvage value is $$600.$ Dorothy & George

Company estimates that annual cash savings from using this machine will be $$8,000.$ The

company's cost of capital is $8$ percent and its income tax rate is $40$ percent. The company uses

straight$-$line depreciation.

Data

Cost of new machine

Machine's estimated useful life

Estimated salvage value

Annual cost savings

Cost of capital

Income tax rate

Required:

What is this investment's net after$-$tax annual cash inflow $($rounded to nearest whole dollar$)?$

What is the payback period in years? $($Round your answer to two $(2)$ decimal places.$)$

What is the net present value $($NPV of this investment? the present value annuity factor for

$8\%,6$ years is $4\mathrm{.}623.$

Cash flow

What are the minimum net after$-$tax cost savings that make the proposed investment

acceptable? The present value factor for $8\%,6$ years is $0\mathrm{.}630$; the present value annuity factor for

$8\%,6$ years is $4\mathrm{.}623.$ Round your final answer to the nearest whole dollar.