Techno Labs, a taxpaying entity, estimates that it can save $20,000 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. Techno Labs' required rate of return is 12% Assume all cash flows occur at year-end except for initial investment amounts. Techno Labs uses straight-line depreciation. The income tax rate is 38% for all transactions that affect income taxes. a. Net present value (NPR) (Round interim calculations and your fina 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 years for the payback period is c. Internal rate of retum (Round the rate to two decimal places, XXX%) The internal rate of retur (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 two decimal places, XXX%) Based on the net initial investment, the accrual accounting rate of retum (AARR) is e. Accrual accounting rate of retum based on average investment (Round interim calculations to the nearest whole dollar. Round the rate to two decimal places, X.XX%.) 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 $14,000 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. because the disposal value Payback would because the disposal value IRR would because the disposal value % % NPV would because the disposal value AARR would under either method. Med a. Net present value (NPR) (Round interim calculations and your final answers to present value.) 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, X.XX%.) The internal rate of return (IRR) is %. d. Accrual accounting rate of return based on net initial investment (Round interin places, X.XX%.) Based on the net initial investment, the accrual accounting rate of return (AARR) e. Accrual accounting rate of return based on average investment (Round interim places, X.XX%.) 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 of 8 years? Assume depreciation deductions are based on the $115,000 purchase Answer briefly in words without further calculations. NPV would because the disposal value Payback would e the disposal value IRR would e the disposal value decrease AARR would e the disposal value under either meth increase not change In save $29,000 a year in cash operating costs for the next 8 years if it buys a special-purpose eye-testing value is expected. Techno Labs' required rate of return is 12%. Assume all cash flows occur at year-end uses straight-line depreciation. The income tax rate is 38% for all transactions that affect income taxes. ons and your final answers to the nearest whole dollar. Use a minus sign or parentheses for a negative ne mal places.) Eimal places . % does not affect average annual operating income. Initial investr does not affect the net initial investment. cimal results in a decrease in average annual operating income. ccounting rat rage investor results in a decrease to the net initial investment imal results in an increase in average annual operating income. nting rate of results in an increase in the total present value of cash inflows. h requirement based on the ns. it the end iod. results in an increase to the net initial investment. posal value Sorry sposal value sposal value sposal value
