Austin Inc. is considering the purchase of new equipment that will automate production and thus...
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Austin Inc. is considering the purchase of new equipment that will automate production and thus reduce labor costs. Austin made the following estimates related to the new machinery: BE: (Click the icon to view the information.) Present Value of $1 table Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table Read the requirements. i X Data Table Requirements X $134,000 $35,000 1. Calculate (a) net present value, (b) payback period, (c) discounted payback period, and (d) internal rate of return. 2. Compare and contrast the capital budgeting methods in requirement 1. Cost of the equipment Reduced annual labor costs Estimated life of equipment Terminal disposal value After-tax cost of capital 5 years $0 Print Done 10% Tax rate 20% Assume depreciation is calculated on a straight-line basis for tax purposes. Assume all cash flows occur at year-end except for initial investment amounts. Print Done Enter any number in the edit fields and then click Check
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