Annual rate of return on the proposed capital expenditure

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Vilas Company is considering a capital investment of $190,500 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 $17,180 and $49,590, respectively. Vilas has a 12% cost of capital rate, which is the required rate of return on the investment.

Click here to view the factor table. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Compute the cash payback period. (Round answer to 1 decimal place, e.g. 10.5.)

Cash payback period __________ years

Compute the annual rate of return on the proposed capital expenditure. (Round answer to 1 decimal place, e.g. 20.5.)

Annual rate of return ________%

Using the discounted cash flow technique, compute the net present value. (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.) Net present value _________

Reference no: EM131205033

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Annual rate of return on the proposed capital expenditure : Vilas Company is considering a capital investment of $190,500 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. Compute the annual r..
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