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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Vilas Company is considering a capital investment of $190,000 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 ?ows are expected to be $12,000 and $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 ?ow technique, compute the net present value.
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