Question
(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
(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 $135,700 and have a useful life of seven years. The banks controller has estimated that the automatic teller machines will save the bank $29,500 after taxes during each year of their life (including the depreciation tax shield). The machines will have no salvage value. Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.)
Required:
1. Compute the payback period for the proposed investment. (Round your answer to 1 decimal place.)
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 intermediate calculations. Negative amounts should be indicated by a minus sign.)
Future Value and Present Value Tables Future Value and Present Value Tables
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started