Requirement 5 Answer is not 6429 or 1429 This is my third at

E21-20 (similar to) Question Help Boston Cola is considering the purchase of a special-purpose botting machine tor $70,000 It is expected to have a usefu life of 4 years with no terminal dicposal value. The plant manager estmates the savings in cash operating costs EEB (Cick the icon to view the savings in cash operating costs) Boston Coka uses a reared rate of return of 20% in its capital budgeting deceionsignare income taues n your analysis Assume at all cash tows occur at year-end except for intial investment amounts Read the tequirements .Net present value (Use factor amounts rounded to three decimal places Round your answers t he net present value is s (8.50) 2. Payback peried (Round your anower to two decimal places The payback period is 2.75 years 3. Discounted payback period the nearest whole dollar, Use a minus sign or parentheses for a negative net present value) 371 3 64 Amount can not be determined 375 method) (use a trus and-ero roch and straighs-lne interpoliation as necessary Round your answer to the nearest hundredth of a percent 1238 % rate of straigh-ine decrecation Use the average annual savings in cash operating coet Accrual accounting r iniial investment (Assume accounting rate of seturn ) Round your tral anower to the nearest hundredth of a percent, X.xxs) The accrual accounting rate of return (AARR) rate of return based on net ts when computing the numerator of the accual 1%

Solution

Answer : 5 - accural accounting rate of return =

average annual accounting profit / Initial investment

Average annual Accounting profit is calculated as follows

Sum of cash flow 90000

= (90000/4-70000/4)

= 5000

Initial investment given 70000

Their fore 5000/70000 = 7.14%

Thank you