The Logan Publishing Corporation Is Contemplating the Acquisition of a State

question 83

Essay

The Logan Publishing Corporation is contemplating the acquisition of a state of the art printing press.The following information is relevant:
The cost of the printing press is $\$ 180,000$
The anticipated revenue from the printing press is $\$ 120,000$ per year. The useful life of the car washis 12 years.
Anmul operating costs are expected to be:

$\begin{array}{ll}\text { Salaries } &\$ 40,000 \\\text {Utilities } & 10,000 \\\text { Power usage } &4,600\\\text { Supplies } & 6,400\\\text { Repars/maintenance} &12,000\\\end{array}$

The firm uses straight-line depreciation
The salvage value for the car wash is zero.
The company's cutdf points are as follows:
\begin{array}{ll}\text { Payback } &4years \\\text {Accounting rate of return } & 16 \% \\\\text { Internal rate of retune } &16\%\\\\end{array}
Ignore income taxes.
Required:
a. $\text { Compute the annual cash inflow }$
b. $\text { Compute the net present value }$
c. $\text { Compute internal rate of retun }$
d. $\text { Compute the payback period }$
e. $\text { Compute the profitability index }$
f. $\text { Should the printing press be purchased. }$

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Definitions:

Diastole

The relaxation phase of the heartbeat; the period of least pressure.

Systole

The contraction phase of the heart; the greatest amount of blood pressure.

Mensuration

The branch of mathematics dealing with the measurement of shapes and figures.

Vital Signs

Basic body functions measured to assess the general physical health of a person, including temperature, pulse, respiration, and blood pressure.