Requiled Information Exerclse 16-35 Payback Perlod; Even Cash Flows (Sectlon 3) (LO 16-1, 16-6, 16-8) [The following Information applies to the questlons displayed below.] The management of Niagara National Bank is considering an Investment in automatic teller machines. The machines would cost $153,600 and have a useful life of seven years. The bank's controller has estimated that the automatic teller machines will save the bank $32,000 after taxes during each year of their Ilfe (Including the depreciation tax shield). The machines will have no salvage value. Use Appendix A for your reference. (Use approprlate factor(s) from the tables provided.) Exercise 16-35 Part 1 Required: 1. Compute the payback perlod for the proposed Investment. (Round your answer to 1 decimal place.) Required Information Exerclse 16-35 Payback Perlod; Even Cash Flows (Sectlon 3) (LO 16-1, 16-6, 16-8) [The following Information applies to the questions displayed below.] The management of Niagara National Bank is considering an Investment In automatic teller machines. The machines would cost $153,600 and have a useful life of seven years. The bank's controller has estimated that the automatic teller machines will save the bank $32,000 after taxes during each year of their life (Including the depreclation tax shleld). The machines will have no salvage value. Use Appendix A for your reference. (Use approprlate factor(s) from the tables provided.) Exercise 16-35 Part 2 2. Compute the net present value of the proposed Investment assuming an after-tax hurdle rate of (a) 10 percent, (b) 12 percent, and (c) 14 percent. (Do not round Intermedlate calculations. Negatlve amounts should be Indlcated by a minus slgn.) Required Information Exerclse 16-35 Payback Perlod; Even Cash Flows (Sectlon 3) (LO 16-1, 16-6, 16-8) [The following Information applies to the questions displayed below.] The management of Niagara National Bank is considering an Investment In automatic teller machines. The machines would cost $153,600 and have a useful Ilfe of seven years. The bank's controller has estimated that the automatic teller machines will save the bank $32,000 after taxes during each year of their life (Including the depreclation tax shield). The machines will have no salvage value. Use Appendix A for your reference. (Use approprlate factor(s) from the tables provided.) Exercise 1635 Part 3 3. Which of the following statements are true? (You may select more than one answer. SIngle cllck the box with the questlon mark to produce a check mark for a correct answer and double cllck the box with the question mark to empty the box for a wrong answer.) The net-present-value method is preferable to the payback method. The payback method is preferable to the net-present-value method. The payback period criterion fails to account for the time value of money. If management uses the payback method, the investment will be approved only if the required payback period meets or exceeds the years calculated. ? The cut-off value for the payback period is very much dependent on the bank's hurdle rate. ? The cut-off value for the payback period has nothing to do with the bank's hurdle rate
