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.