Reference no: EM132528206

Question 1: If Revenue from contract sales is $ 300,000, Expenses other than depreciation is $ 218,000, Depreciation (straight-line basis) is $41,000, for a total of( 218,000+41,000=$259,000). The increase in net income from contract work is $ 41,000. All revenue and all expenses other than depreciation will be received or paid in cash in the same period as recognized for accounting purposes. We know the payback period is 2 years. The net present value of the proposal to undertake contract work discounted at an annual rate of 6 percent. The 1st-year discount rate is 0.943, 2nd year is 1.833, 3rd is 2.402, and 4th is 3.465.