Ferrent is debating whether to invest in new equipment to manufacture industrial distilling vats. The new equipment woul

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Ferrent is debating whether to invest in new equipment to
manufacture industrial distilling vats. The new equipment would
cost $900,000 and would have an estimated four-year life and no
salvage value. The estimated annual operating results with the new
equipment are as follows. (Use Exhibit 26-4.)
All revenue from the sale of industrial distilling vats and all
expenses (except depreciation) will be received or paid in cash in
the same period as recognized for accounting purposes.
a. Compute the annual cash flows for
Ferrent’s investment in the new equipment.
b. Compute the payback period for
Ferrent’s investment in the new equipment. (Round your
answer to 1 decimal place.)
c. Compute the return on average
investment for Ferrent’s investment in the new
equipment. (Round your percentage answer to 1 decimal
place (i.e., 12.34 to be entered as 12.3).)
d. Compute the total present value of the
expected future annual cash inflows, discounted at an annual rate
of 10 percent for Ferrent’s investment in the new
equipment. (Round your "PV factor" to 3 decimal places
and final answer to the nearest dollar amount.)
e. Compute the net present value of the
proposed investment discounted at 10 percent for Ferrent’s
investment in the new equipment. (Enter negative value
with a minus sign. Round your "PV factor" to 3 decimal places and
final answer to the nearest dollar amount.)