Bob Jensen Inc. purchased a $580,000 machine to manufacture specialty taps for electrical equipment. Jensen expects to sell all it can manufacture in the next 10 years. The machine is expected to have a 10-year useful life with no salvage value. Jensen uses straight-line depreciation. Jensen uses a 10% discount rate in evaluating capital investments, the investment is subject to taxes, and the projected pretax operating cash inflows are as follows:
Year |
|
|
Pretax Cash Inflow |
|
1 |
|
$ |
58,000 |
|
2 |
|
|
71,000 |
|
3 |
|
|
107,000 |
|
4 |
|
|
178,000 |
|
5 |
|
|
214,000 |
|
6 |
|
|
268,000 |
|
7 |
|
|
241,000 |
|
8 |
|
|
214,000 |
|
9 |
|
|
107,000 |
|
10 |
|
|
71,000 |
|
|
|
|
|
|
Jensen has been paying 25% for combined federal, state, and local income taxes, a rate that is not expected to change during the period of this investment. The firm uses straight-line depreciation. Assume, for simplicity, that MACRS depreciation rules do not apply.
Required:
Using Excel, compute the following for the proposed investment:
1. The payback period, under the assumption that the cash inflows occur evenly throughout the year.
(Do not round intermediate calculations. Round your final answer to 1 decimal place.)
2. The accounting (book) rate of return based on (a) initial investment, and (b) average investment.
(Round your final answers to 1 decimal place.)
3. The net present value (NPV).
(Do not round intermediate calculations. Round your final answer to nearest whole dollar amount.)
The answers that I received are not coming up correct in the systemIm using to submit my answers. Can I please get some assistance