Bryant Company Has Obtained the Following Data About a Possible

question 105

Essay

Bryant Company has obtained the following data about a possible planned investment:
$\begin{array}{ll}\text { Cost } & \$ 270,000 \\\text { Terminal salvage value in } 8 \text { years } & \$ 10,000 \\\text { Annual cash operating savings for } 8 \text { years (end of year) } & \$ 50,000 \\\text { Estimated useful life in years } & 8 \\\text { Minimum desired rate of return } & 10 \% \\\text { Present value of ordinary annuity of one, } 10 \%, 8 \text { periods } & 5.3349 \\\text { Present value of one, } 10 \%, 8 \text { periods } & 0.4665\end{array}$
The company uses straight-line depreciation method for financial reporting.Ignore income taxes.The cash operating savings of $50,000 do not include depreciation expense.
Required:
A) Compute the net present value of the investment.
B) Compute the payback period.
C) Compute the accounting rate of return using the initial required investment.

• A) Compute the net present value of the investment.
• B) Compute the payback period.
• C) Compute the accounting rate of return using the initial required investment.

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Definitions:

Office Equipment

Devices or machinery used in an office environment for tasks such as printing, computing, or communication.

Industrial Services

Services provided by businesses to other businesses within the industrial sector, often including maintenance, repair, and operations.

Support Products

Goods or services purchased by a business to facilitate its operations, distinct from its core offerings to its customers.

Maintenance

The process of preserving a condition or situation or the work necessary to keep something functioning or in service.