Need help Icascshow your calculations in the threads and assist others who may have challenges by discussingyour analysis and calculations;Carper Company is considering a capital investment of $390,000 in additional productive facilities. The newmachinery is expected to have useful life of 6 years with no salvage value. Depreciation is by the straight-linemethod. During the life of the investment, annual net income and net annual cash flows are expected to be$20,000 and $85,000, respectively. Carper has an 8% cost of capital rate, which is the required rate of returnon the investment.Instructions (Round to two decimals.)a. Compute (1) the cash payback period and (2) the annual rate of return on the proposed capitalexpenditure.b. Using the discounted cash flow technique, compute the net present value. wi themwessinec. Carper was presented with a second capital investment that provided similar production facilities asthe first one. This investment cost $400,000, had a useful life of 7 years with a salvage value ofForum: Accounting Discussion Chapter 25 Capital Investments...5/3/2020$15,000. Depreciation is by the straight-line method. During the life of the investment, annual netincome and net annual cash flows are expected to be $25,000 and $80,000 respectively. Carper's 8%cost of capital is also the required rate of return on the investment.1. Compute the cash payback period.2. Compute the annual rate of return.3. Using the discounted cash flow technique, compute the net present value.4. Based on these calculations, which investment do you recommend? Explain why.

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Icasc show your calculations in the threads and assist others who may have challenges by discussing your analysis and calculations; Carper Company is considering a capital investment of $390,000 in additional productive facilities. The new machinery is expected to have useful life of 6 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 $20,000 and $85,000, respectively. Carper has an 8% 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 proposed capital expenditure. b. Using the discounted cash flow technique, compute the net present value.

Icasc show your calculations in the threads and assist others who may have challenges by discussing your analysis and calculations; Carper Company is considering a capital investment of $390,000 in additional productive facilities. The new machinery is expected to have useful life of 6 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 $20,000 and $85,000, respectively. Carper has an 8% 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 proposed capital expenditure. b. Using the discounted cash flow technique, compute the net present value.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 12P

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