81) Lake Torrens Minimarket desires to buy a new coding machine to help control inventories.

The machine sells for $73 172 and requires working capital of $8000. Its estimated useful

life is five years and will have a salvage value of $8000. Recovery of working capital will be

$8000 at the end of its useful life. Annual cash savings from the purchase of the machine

will be $20 000.


a. Compute the net present value at a 14% required rate of return.

b. Compute the internal rate of return.

c. Determine the payback period of the investment.




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