74 sam 39 s structures desires to buy a new crane and accessories to help move and i 4328673

74) Sam's Structures desires to buy a new crane and accessories to help move and install

modular buildings. The machine sells for $75 000 and requires working capital of $10 000.

Its estimated useful life is six years and it will have a salvage value of $17 560. Recovery of

working capital will be $10 000 at the end of its useful life. Annual cash savings from the

purchase of the machine will be $20 000.

Required:

a. Compute the net present value at a 12% required rate of return.

b. Compute the internal rate-of-return.

c. Determine the payback period of the investment.

74)

75) There are no questions in this section. 75)

76) Supply the missing data for each of the following proposals:

Proposal A Proposal B Proposal C

Initial investment (a) $75 000 $255 000

Annual net cash inflow $90 000 (c) (e)

Life, in years 10 6 10

Salvage value $0 $10 000 $0

Payback period in years (b) (d) 5.65

Internal rate of return 12% 24% (f)

76)