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:

Solver

A tool or algorithm used to find solutions to mathematical problems or optimize certain processes.

Optimal Solutions

Solutions that are the best possible under a given set of constraints or conditions.

Linear Optimization Models

These are mathematical models used to find the best outcome, such as maximum profit or lowest cost, under given constraints by using linear equations.

Balance Constraints

Restrictions in optimization problems that ensure the total input equals the total output, maintaining equilibrium.