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Raleigh Research, a taxpaying entity, estimates that it can save $29,000 a year in cash operating costs for the next 8 years if it buys
Raleigh Research, a taxpaying entity, estimates that it can save $29,000 a year in cash operating costs for the next 8 years if it buys a special-purpose eye-testing machine at a cost of $115,000. No terminal disposal value is expected. Raleigh Research's required rate of return is 10%. Assume all cash flows occur at year-end except for initial investment amounts. Raleigh Research uses straight-line depreciation. The income tax rate is 38% for all transactions that affect income taxes. (Click the icon to view the Future Value of $1 factors.) (Click the icon to view the Future Value of Annuity of $1 factors.) (Click the icon to view the Present Value of $1 factors.) (Click the icon to view the Present Value of Annuity of $1 factors.) Read the Requirement 1. Calculate the following for the special-purpose eye-testing machine: 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 $ Requirements 1. Calculate the following for the special-purpose eye-testing machine: a. Net present value b. Payback period c. Internal rate of return d. Accrual accounting rate of return based on net initial investment e. Accrual accounting rate of return based on average investment 2. How would your computations in requirement 1 be affected if the special-purpose machine had a $9,000 terminal disposal value at the end of 8 years? Assume depreciation deductions are based on the $115,000 purchase cost and zero terminal disposal value using the straight-line method. Answer briefly in words without further calculations
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