could you please answer this question and put the steps Tha

could you please answer this question and put the steps :) Thankk you !!!

Average Rate of Return, Cash Payback Period, Net Present Value Method for a Service Company Spanish Peaks Railroad Inc. is considering acquiring equipment at a cost of $140,000. The equipment has an estimated life of 10 years and no residual value. It is expected to provide yearly net cash flows of $35,000. The company\'s minimum desired rate of return for net present value analysis is 12% Present Value of an Annuity of $1 at Compound Interest 6% 0.943 1.833 2.673 3.465 4.212 4.917 5.582 6.210 6.802 7.360 1090 0.909 1.736 2.487 3.170 3.791 4.355 4.868 5.335 5.759 6.145 12% 0.893 1.690 2.402 3.037 3.605 15% 0.870 1.626 2.283 2.855 3.353 3.785 4.160 4.487 4.772 5.019 2090 0.833 1.528 2.106 2.589 2.991 3.326 3.605 3.837 4.031 4.192 Year 2 3 4 8 9 10 4.564 4.968 5.328 5.650 Compute the following:

Solution

A)Depreciation =cost /useful life

         = 140000/10 = 14000

Average investment = [Beginning +ending ]/2

            = [140000+0]/2 = 70000

Net Income =cash flow - depreciation

           = 35000-14000= 21000

Average rate of return = Net income /Average investment

              = 21000 / 70000

              = .30 or 30%

c)

Present value of cash flow =[PVA 12%,10*CF]

             =[5.650 * 35000]

             = 197750

Amount to be invested = (140000)

Net present value = 197750-140000 = 57750

year	0	1	2	3	4	5	6	7	8	9	10
Depreciation	0	14000	14000	14000	14000	14000	14000	14000	14000	14000	14000
Book value	140000	140000--14000 = 126000	126000-14000= 112000	98000	84000	70000	56000	42000	28000	14000	0