Answer Happy

Wildhorse Corporation is reviewing an investment proposal.
The initial cost is $107,700. Estimates of the book value of the
investment at the end of each year, the net cash flows for each
year, and the net income for each year are presented in
the following schedule. All cash flows are assumed to take
place at the end of the year. The salvage value of the investment
at the end of each year is assumed to equal its book value. There
would be no salvage value at the end of the investment’s
life.
Investment Proposal
Year
Book Value
Annual
Cash Flows
Annual
Net Income
1
$69,300
$45,700
$7,300
2
41,600
40,400
12,700
3
21,300
36,000
15,700
4
8,200
31,000
17,900
5
0
24,605
16,405
Wildhorse Corporation uses an 11% target rate of return for
new investment proposals.
(a)

What is the cash payback period for this
proposal? (Round answer to 2 decimal places, e.g.
10.50.)
(b)

What is the annual rate of return for the
investment? (Round answer to 2 decimal places,
e.g. 10.50%.)
(c)

What is the net present value of the
investment? (If the net present value is negative,
use either a negative sign preceding the number e.g. -45 or
parentheses eg (45). Round answer to 0 decimal places, e.g. 125.
For calculation purposes, use 5 decimal places as displayed in the
factor table provided.)