Vernon Electronics is considering investing in manufacturing equipment expected to cost $$370,000.$ The equipment has an estimated useful life of four years and a salvage value of $$21,000.$ It is expected to produce incremental cash revenues of $$185,000$ per year. Vernon has an effective income tax rate of $40$ percent and a desired rate of return of $14$ percent. $($PV of $$1$ and PVA of $$1)$

Note: Use appropriate factor$($s$)$ from the tables provided.

Required

a$.$ Determine the net present value and the present value index of the investment, assuming that Vernon uses straight$-$line depreciation for financial and income tax reporting.

b$.$ Determine the net present value and the present value index of the investment, assuming that Vernon uses double$-$declining$-$balance depreciation for financial and income tax reporting.

d$.$ Determine the payback period and unadjusted rate of return $($use average investment and do not consider salvage value$),$ assuming that Vernon uses straight$-$line depreciation.

e$.$ Determine the payback period and unadjusted rate of return $($use average investment and do not consider salvage value$),$ assuming that Vernon uses double$-$declining$-$balance depreciation. $($Note: Use average annual cash flow when computing the payback period and average annual income when determining the unadjusted rate of return.$)$Vernon Electronics is considering investing in manufacturing equipment expected to cost $$370,000.$ The equipment has an estimated

useful life of four years and a salvage value of $$21,000.$ It is expected to produce incremental cash revenues of $$185,000$ per year.

Vernon has an effective income tax rate of $40$ percent and a desired rate of return of $14$ percent. $($PV of $$1$ and PVA of $$1)$

Note: Use appropriate factor$($s$)$ from the tables provided.

Required

a$.$ Determine the net present value and the present value index of the investment, assuming that Vernon uses straight$-$line

depreciation for financial and income tax reporting.

b$.$ Determine the net present value and the present value index of the investment, assuming that Vernon uses double$-$declining$-$

balance depreciation for financial and income tax reporting.

d$.$ Determine the payback period and unadjusted rate of return $($use average investment and do not consider salvage value$),$ assuming

that Vernon uses straight$-$line depreciation.

e$.$ Determine the payback period and unadjusted rate of return $($use average investment and do not consider salvage value$),$ assuming

that Vernon uses double$-$declining$-$balance depreciation. $($Note: Use average annual cash flow when computing the payback period

and average annual income when determining the unadjusted rate of return.$)$

Complete this question by entering your answers in the tabs below.

Determine the net present value and the present value index of the investment, assuming that Vernon uses straight$-$line

depreciation and double$-$declining$-$balance for financial and income tax reporting.

Note: Round your intermediate calculations and answers for "Net present value" to the nearest whole dollar amount.