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Keeper Inc. is considering the purchase of new equipment that will automate production and thus reduce labor costs. Keeper made the following estimates related to the new machinery: (Click the icon to view the information.) Present Value of $1 table Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table Read the requirements. Requirement 1. Calculate (a) net present value, (b) payback period, (c) discounted payback period, and (d) internal rate of return. a. Net present value. (Round intermediary calculations to the nearest whole dollar. Use factors to three decimal places, X.XXX, and use a minus sign or parentheses for a negative net present value. Enter the net present value of the investment rounded to the nearest whole dollar.) The net present value is $ 40,275 b. Payback period. (Round your answer to two decimal places.) The payback period in years is 4.79 c. Discounted payback period. (Round interim calculations to the nearest whole dollar. Round the rate to two decimal places, X.XX%.) The discount payback period in years is 11.496 Data table Cost of the equipment Reduced annual labor costs Estimated life of equipment Terminal disposal value After-tax cost of capital $143,000 $35,000 10 years $0 10% 25% Tax rate Assume depreciation is calculated on a straight-line basis for tax purposes. Assume all cash flows occur at year-end except for initial investment amounts. Print Done Requirements 1. Calculate (a) net present value, (b) payback period, (c) discounted payback period, and (d) internal rate of return. 2. Compare and contrast the capital budgeting methods in requirement 1. Print Done -

Keeper Inc. is considering the purchase of new equipment that will automate production and thus reduce labor costs. Keeper made the following estimates related to the new machinery: (Click the icon to view the information.) Present Value of $1 table Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table Read the requirements. Requirement 1. Calculate (a) net present value, (b) payback period, (c) discounted payback period, and (d) internal rate of return. a. Net present value. (Round intermediary calculations to the nearest whole dollar. Use factors to three decimal places, X.XXX, and use a minus sign or parentheses for a negative net present value. Enter the net present value of the investment rounded to the nearest whole dollar.) The net present value is $ 40,275 b. Payback period. (Round your answer to two decimal places.) The payback period in years is 4.79 c. Discounted payback period. (Round interim calculations to the nearest whole dollar. Round the rate to two decimal places, X.XX%.) The discount payback period in years is 11.496 Data table Cost of the equipment Reduced annual labor costs Estimated life of equipment Terminal disposal value After-tax cost of capital $143,000 $35,000 10 years $0 10% 25% Tax rate Assume depreciation is calculated on a straight-line basis for tax purposes. Assume all cash flows occur at year-end except for initial investment amounts. Print Done Requirements 1. Calculate (a) net present value, (b) payback period, (c) discounted payback period, and (d) internal rate of return. 2. Compare and contrast the capital budgeting methods in requirement 1. Print Done -

Managerial Accounting
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 1MAD: San Lucas Corporation is considering investment in robotic machinery based upon the following...
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Keeper Inc. is considering the purchase of new equipment that will automate production and thus reduce labor costs. Keeper made the following estimates related to the new machinery: (Click the icon to view the information.) Present Value of $1 table Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table Read the requirements. Requirement 1. Calculate (a) net present value, (b) payback period, (c) discounted payback period, and (d) internal rate of return. a. Net present value. (Round intermediary calculations to the nearest whole dollar. Use factors to three decimal places, X.XXX, and use a minus sign or parentheses for a negative net present value. Enter the net present value of the investment rounded to the nearest whole dollar.) The net present value is $ 40,275 b. Payback period. (Round your answer to two decimal places.) The payback period in years is 4.79 c. Discounted payback period. (Round interim calculations to the nearest whole dollar. Round the rate to two decimal places, X.XX%.) The discount payback period in years is 11.496 Data table Cost of the equipment Reduced annual labor costs Estimated life of equipment Terminal disposal value After-tax cost of capital $143,000 $35,000 10 years $0 10% 25% Tax rate Assume depreciation is calculated on a straight-line basis for tax purposes. Assume all cash flows occur at year-end except for initial investment amounts. Print Done Requirements 1. Calculate (a) net present value, (b) payback period, (c) discounted payback period, and (d) internal rate of return. 2. Compare and contrast the capital budgeting methods in requirement 1. Print Done -
Transcribed Image Text:Keeper Inc. is considering the purchase of new equipment that will automate production and thus reduce labor costs. Keeper made the following estimates related to the new machinery: (Click the icon to view the information.) Present Value of $1 table Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table Read the requirements. Requirement 1. Calculate (a) net present value, (b) payback period, (c) discounted payback period, and (d) internal rate of return. a. Net present value. (Round intermediary calculations to the nearest whole dollar. Use factors to three decimal places, X.XXX, and use a minus sign or parentheses for a negative net present value. Enter the net present value of the investment rounded to the nearest whole dollar.) The net present value is $ 40,275 b. Payback period. (Round your answer to two decimal places.) The payback period in years is 4.79 c. Discounted payback period. (Round interim calculations to the nearest whole dollar. Round the rate to two decimal places, X.XX%.) The discount payback period in years is 11.496 Data table Cost of the equipment Reduced annual labor costs Estimated life of equipment Terminal disposal value After-tax cost of capital $143,000 $35,000 10 years $0 10% 25% Tax rate Assume depreciation is calculated on a straight-line basis for tax purposes. Assume all cash flows occur at year-end except for initial investment amounts. Print Done Requirements 1. Calculate (a) net present value, (b) payback period, (c) discounted payback period, and (d) internal rate of return. 2. Compare and contrast the capital budgeting methods in requirement 1. Print Done -
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