Boston Cola is considering the purchase of a special-purpose bottling machine for
$80,000.
It is expected to have a useful life of
4
years with no terminal disposal value. The plant manager estimates the following savings in cash operating costs:
| Year | Amount |
| Year 1 | $35,000.00 |
| Year 2 | 30,000 |
| Year 3 | 20,000 |
| Year 4 | 12,000 |
| Total | $97,000.00 |
Calculate the following for the special purpose bottling machine:
| 1. | Net present value |
| 2. | Payback period |
| 3. | Discounted payback period |
| 4. | Internal rate of return (using the interpolation method) |
| 5. | Accrual accounting rate of return based on net initial investment (Assume straight-line depreciation. Use the average annual savings in cash operating costs when computing the numerator of the accrual accounting rate of return.) |
1. Net present value. (Use factor amounts rounded to three decimal places. Round your answers to the nearest whole dollar. Use a minus sign or parentheses for a negative net present value.)
| The net present value is |