Question Help City Hospital, a taxpaying entity, estimates that it can save $28,000 a year in cash operating costs for the next 10 years if it buys a special-purpose eye-testing machine at a cost of $110,000. No terminal disposal value is expected. City Hospital's required rate of return is 10%. Assume all cash flows occur at year-end except for initial investment amounts. City Hospital uses straight-line depreciation. The income tax rate is 30% for all transactions that affect income taxes. Present Value of $1 table Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table Read the requirements Requirement 1. Calculate the following for the special-purpose eye-testing machine a. Net present value (NPR) (Round interim calculations and your final answers to the nearest whole dollar. Use a minus sign or parentheses for a negative net present value.) The net present value is b. Payback period (Round your answer to two decimal places.) The number of vears for the navback period is Choose from any list or enter any number in the input fields and then continue to the next question. Save for Later preciation Present Value of $1 table Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table Read the requirements Requirement 1. Calculate the following for the special-purpose eye-testing machine: a. Net present value (NPR) (Round interim calculations and your final answers to the nearest whole dollar. Use a minus sign or parenthese The net present value is b. Payback period (Round your answer to two decimal places.) The number of years for the payback period is c. Internal rate of return (Round the rate to two decimal places, XXX%) The internal rate of return (IRR) is %. d. Accrual accounting rate of return based on net initial investment (Round interim calculations to the nearest whole dollar. Round the rate to Based on the net initial investment, the accrual accounting rate of return (AARR) is %. e. Accrual accounting rate of return based on average investment (Round interim calculations to the nearest whole dollar. Round the rate to Based on average investment, the accrual accounting rate of return (AARR) is Requirement 2. How would your computations in requirement 1 be affected if the special-purpose machine had a $9,000 terminal disposal v terminal disposal value using the straight-line method. Answer briefly in words without further calculations. % Choose from any list or enter any number in the input fields and then continue to the next question Save for Later Type here to search O e internal rate of return (IRR) IS Accrual accounting rate of return based on net initial investment (Round interim calculations to the nearest whole dollar. Round the ased on the net initial investment, the accrual accounting rate of return (AARR) is %. Accrual accounting rate of return based on average investment (Round interim calculations to the nearest whole dollar. Round the Based on average investment, the accrual accounting rate of return (AARR) is % Requirement 2. How would your computations in requirement 1 be affected if the special-purpose machine had a $9,000 terminal disp erminal disposal value using the straight-line method Answer briefly in words without further calculations, NPV would because the disposal value Payback would because the disposal value IRR would because the disposal value does not affect average annual operating income does not affect the net initial investment. AARR would because the disposal value results in a decrease in average annual operating income under either method results in a decrease to the net initial investment results in an increase in average annual operating income. Choose from any list or enter any number in the input field results in an increase in the total present value of cash inflows. results in an increase to the net initial investment Save for Later Type here to search O BI
