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Compute the annual rate of return on the proposed

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Vilas Company is considering a capital investment of $195,000 in additional productive facilities. The new machinery is expected to have a useful life of 5 years with no salvage value. Depreciation is by the straight-line method. During the life of the investment, annual net income and net annual cash flows are expected to be $12,675 and $50,000, respectively. Vilas has a 12% cost of capital rate, which is the required rate of return on the investment

Question A) Compute the cash payback period

Question B) Compute the annual rate of return on the proposed capital expenditure

Question C) Using the discounted cash flow technique, compute the net present value.

Reference no: EM132510685

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