The FAX of Life Company is considering the purchase of 100 FAX machines which will be...

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Accounting

The FAX of Life Company is considering the purchase of 100 FAXmachines which will be leased to a convenience store chain.Individual convenience stores will then charge a small fee for theuse of the machine by customers. The FAX machines will cost $70,000and will be sold at the end of four years for the estimated $16,000salvage value. The annual cash inflow from leasing the machines isexpected to be $20,000. The income tax rate is 25%. The cost ofcapital is 12%.
Calculate the answer for each of the following capital budgetingmethods. 1. Net Present Value 2. Internal Rate of Return 3. PaybackPeriod 4. Accountant's Rate of Return

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Depreciation per year 70000160004 years 13500 Calculation of net income and annual cash flow after tax Annual Cash Inflow 20000 Less Depreciation 13500 Income Before See Answer

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