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CoursHeroTranscribedText: Capital Investment Decision P5. Edge Company's production vice president believes keeping up-to-date with tech-...

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CoursHeroTranscribedText: Capital Investment Decision P5. Edge Company's production vice president believes keeping up-to-date with tech- nological changes is what makes the company successful and feels that a machine intro- duced recently would fill an important need. The machine has an estimated useful life of four years, a purchase price of $250,000, and a residual value of $25,000. The company controller has estimated average annual net income of $11,250 and the following cash flows for the new machine: Cash Flow Estimates Year Cash Inflows Cash Outflows Net Cash Inflows $325,000 $250,000 $75,000 320,000 250,000 70,000 315,000 250,000 65,000 310,000 250,090 60,000 The company uses a 12 percent minimum rate of return and a three-year payback period for capital investment evaluation purposes. REQUIRED 1. Analyze the data about the machine. Use the following evaluation approaches in your analysis: (a) the net present value method (Round to the nearest dollar.) (b) the accounting rate-of return method (Round to one decimal place.) (c) the payback period method (Round to one decimal place.)

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