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MBA, Ph.D in Management
Harvard university
Feb-1997 - Aug-2003
Professor
Strayer University
Jan-2007 - Present
Paml Company is considering a capital investment of $190,600 in additional productive 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 $14,980 and $49,040, respectively. Vilas has a 12% cost of capital rate, which is the required rate of return on the investment. (Refer the below table)
Â
Compute the cash payback period . (Round answer to 1 decimal place, e.g. 10.5.)
Â
Â
Compute the annual rate of return on the proposed capital expenditure-Â (Round answer to 1 decimal place, e.g. 20.5.)
Â
Â
Using discount cash flow-Â (If the net present value is negative, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round answer for present value to 0 decimal places, e.g. 125.)
Â
So far I have 3.9 for cash payback & 15.7 for annual rate of return. Am I right and I still need help with the third one.
Help please!
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