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Cost Accounting II Assignment III (LO 7) McLynn, Inc. is considering the purchase of a new...

Cost Accounting II

Assignment III

(LO 7)

McLynn, Inc. is considering the purchase of a new machine that will cost $ Plug in the last 6 digits of your ID. The machine has an estimated useful life of 3 years. Assume that the company uses the straight-line method. The new machine will have a $10,000 salvage value at the end of its estimated useful life. The machine is expected to save the company $85,000 per year in operating expenses excluding depreciation expense. Cash flow from terminal disposal of motor $8,000.   McLynn uses a 40% estimated income tax rate and a 16% required rate of return to evaluate capital projects.

Discount rates for a 16% rate are as follows:

                                         Present Value of an

Present Value of $1          Ordinary Annuity of $1

Year 1 .862                                       .862

Year 2 .743                                      1.605

Year 3 .641                                      2.246

Instructions: Using excel

Calculate (a) net present value, (b) payback period, (c) discounted payback period

ID# 170022

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ekkarill92 answered 5 months ago
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