Capital Budgeting with Taxes (Non-MACRS Depreciation); Sensitivity Analysis Gravina Company is planning to spend $6,000 for a machine that it will depreciate on a straight-line basis over 10 years...

Capital Budgeting with Taxes (Non-MACRS Depreciation); Sensitivity Analysis Gravina Company is planning to spend $6,000 for a machine that it will depreciate on a straight-line basis over 10 years with no salvage value. The machine will generate additional cash revenues of $1,200 a year. Gravina will incur no additional costs except for depreciation. Its income tax rate is 35%. The present value annuity factor for 15%, 10 years (from Appendix C, Table 2) is 5.019. Required 1. What is the payback period of the proposed investment (in years, and rounded to 1 decimal place) under the assumption that the cash inflows occur evenly throughout the year? 2. What is the accounting (book) rate of return (ARR) based on the initial investment outlay? Round your answer to 1 decimal place (e.g., 13.571% = 13.6%).

3. What is the maximum amount that Gravina Company should invest if it desires to earn an internal rate of return (IRR) of 15%? Round your answer to the nearest whole dollar.  4. What is the minimum annual (pretax) cash revenue required for the project to earn an IRR of 15%? Round answer to the nearest whole dollar. (Use the PV annuity factor from Appendix C, Table 2 to answer this question.)  5. Prepare a single schedule to show the NPVs associated with a 10-year life under annual after-tax cash flows of $500, $1,000, and $2,000, and discount rates of 10%, 15%, and 20%.