1.)Orasco Company is considering purchasing new equipment for $352,657. It is expected that the equipment will produce net annual cash flows of $49,670 over its 10-year useful life. Annual depreciation will be $35,266. Compute the cash payback period. (Round answer to 1 decimal place, e.g. 10.5.)
_____?___years
2.)Asaki Company accumulates the following data concerning a proposed capital investment: cash cost $210,840, net annual cash flows $40,000, present value factor of cash inflows for 10 years 5.43 (rounded). Determine the net present value, and indicate whether the investment should be made. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45).)
Net present value $__________
Should the investment be made? No/Yes
3.)Neville Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $160,613 and have an estimated useful life of 8 years. It will be sold for $70,800 at that time. (Amusement parks need to rotate exhibits to keep people interested.) It is expected to increase net annual cash flows by $24,300. The company's borrowing rate is 8%. Its cost of capital is 10%. Calculate the net present value of this project to the company. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round computations and final answer for present value to 0 decimal places, e.g. 125. Round computations for Discount Factor to 5 decimal places.)
$_____?_____The project (is or not) acceptable.?
4.)Keane Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $205,217 and has an estimated useful life of 8 years with zero salvage value. Management estimates that the new bottling machine will provide net annual cash flows of $37,300. Management also believes that the new bottling machine will save the company money because it is expected to be more reliable than other machines, and thus will reduce downtime. How much would the reduction in downtime have to be worth in order for the project to be acceptable? Assume a discount rate of 10%. (Hint: Calculate the net present value. If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round computations and final answer for present value to 0 decimal places, e.g. 125. Round computations for Discount Factor to 5 decimal places.)