ute annual rate of return, nayback period, and net at value. 2, 5), AP E24-10 Vilas Company is considering a capital investment of $190,000 in additional pro- ductive facilities. The new machinery is expected to have a useful life of 5 years with no salvage value. Depreciation is by the straight-line method. During the life of the investment, annual net income and net annual cash flows are expected to be $12,000 and Problems: Set A $50,000, respectively. Vilas has a 12% cost of capital rate, which is the required rate of return on the investment. Instructions (Round to two decimals.) (a) Compute (1) the cash payback period and (2) the annual rate of return on the pro- posed capital expenditure. (b) Using the discounted cash flow technique, compute the net present value.

ute annual rate of return, nayback period, and net at value. 2, 5), AP E24-10 Vilas Company is considering a capital investment of $190,000 in additional pro- ductive facilities. The new machinery is expected to have a useful life of 5 years with no salvage value. Depreciation is by the straight-line method. During the life of the investment, annual net income and net annual cash flows are expected to be $12,000 and Problems: Set A $50,000, respectively. Vilas has a 12% cost of capital rate, which is the required rate of return on the investment. Instructions (Round to two decimals.) (a) Compute (1) the cash payback period and (2) the annual rate of return on the pro- posed capital expenditure. (b) Using the discounted cash flow technique, compute the net present value.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 14E

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