Q1) Book & Bible Bookstore wishes to purchase a new coding machine to help control book inventories. Machine sells for $36,586 and needs working capital of $4,000. Its evaluated useful life is five years and will have salvage value of $4,000. Recovery of working capital will be $4,000 at the end of its useful life. Annual cash savings from buy of machine will be $10,000.
a. find out net present value at 14% required rate of return.
b. find out internal rate of return.
c. Find out payback period of the investment.