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Problem 10-22A Effects of straight-line versus accelerated depreciation on an investment decision LO 10-2, 10-4 Adams Electronics is considering investing in manufacturing equipment expected to cost $210,000. The equipment has an estimated useful life of four years and a salvage value of $15,000. It is expected to produce incremental cash revenues of $105,000 per year Adams has an effective income tax rate of 30 percent and a desired rate of return of 10 percent. (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.) Required a. Determine the net present value and the present value index of the investment, assuming that Adams uses straight-line depreciation for financial and income tax reporting. b. Determine the net present value and the present value index of the investment, assuming that Adams uses double-declining- d. Determine the payback period and unadjusted rate of return (use average investment), assuming that Adams uses straight-line e. Determine the payback period and unadjusted rate of return (use average investment), assuming that Adams uses double-declining- balance depreciation for financial and income tax reporting. depreciation. balance depreciation. (Note: Use average annual cash flow when computing the payback period and average annual income when determining the unadjusted rate of return.) Complete this question by entering your answers in the tabs below

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