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P 15-51. LO.2-LO.5(After-tax cash flows; payback; NPV; PI; IRR) Forester Fashions is...

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Accounting

P 15-51. LO.2-LO.5(After-tax cash flows; payback; NPV; PI; IRR) Forester Fashions is
considering the purchase of computerized design software. The software is expected to cost
$320,000, have a useful life of five years, and have no salvage value at the end of its useful life.
Assume that tax regulations permit the following depreciation pattern for this software:
The company's tax rate is 35 percent, and its cost of capital is 8 percent. The software is expected
to generate the following cash savings and cash expenses:
a. Prepare a time line presenting the after-tax operating cash flows.
b. Determine the following on an after-tax basis: payback period, net present value,
profitability index, and internal rate of return. (Round time and PI to one decimal point.)
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