Traditionally, Granite Company has accepted a proposal only if the payback period is less than 50 percent of the asset's useful life. Peggy Casteel is the new accounting manager. She suggested to management that capital budgeting decisions should not be made based solely on the payback period. Granite Company is currently considering purchasing a new machine for the factory that would cost $112,000 and would be sold after 8 years for $50,000. The new machine will generate annual cash flows of $30,000 in its first year of use, $24,000 in its second year of use, $20,000 in the third year, and $14,800 each year thereafter. The company's cost of capital is 12 percent. Required: 1-a. Complete the table given below. 1-b. Calculate the payback period. 1-c. Would Granite Company accept this project based solely on the payback period? 2-a. Complete the table given below and calculate NPV. 2-b. Would Granite Company accept this project if the NPV method is used to evaluate the machine? Answer is not complete. Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Reg 10 Req 24 Reg 2B Complete the table given below. Answer is not complete. Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Req 10 Req 2A Reg 2B Complete the table given below. Initial Annual Cash Unpaid Year Investment Flow Investment 1 S 30,000 $ 30,000 $82,000 2 24,000 54,000 58,000 3 20,000 74,000 38,000 4 14,800 88,800 23,200 5 14,800 103,600 8,400 6 14,800 $ 118,400 7 14,800 133,200.0000 % 8 14,800 $ 148,000.0000 5 Required: 1-a. Complete the table given below. 1-b. Calculate the payback period. 1-c. Would Granite Company accept this project based solely on the payback period? 2-a. Complete the table given below and calculate NPV. 2-b. Would Granite Company accept this project if the NPV method is used to evaluate the machine? Answer is not complete. Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Req 10 Req 2A Req 2B Calculate the payback period. (Round your answer to 2 decimal places.) Payback Period 5.56 Years Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Req 1C Req 2A Reg 2B 0 1 Complete the table given below and calculate NPV. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Negative amounts should be indicated by a minus sign. Round final answers to the nearest whole dollar amount.) Year Cash PV of $1 Present Outflow (12%) Value S 112,000 30,000.0000 26,785 2 24,000.0000 19,132 3 20,000.0000 14,236 4 14,800.0000 9,406 5 14,800.0000 8,398 6 14,800.0000 7,498 14,800.0000 6,694 14,800.0000 5,977 Residual 50,000.0000 20,194 NPV 6,320 7 8 $
