Book & Bible Bookstore desires to buy a new coding machine to help control book inventories.The machine sells for $36,586 and requires working capital of $4,000.Its estimated useful life is five years and will have a salvage value of $4,000.Recovery of working capital will be $4,000 at the end of its useful life.Annual cash savings from the purchase of the machine will be $10,000.Ignore income taxes.Required:
a.Compute the net present value at a 14 percent required rate of return.
b.Compute the internal rate of return.
c.Determine the payback period of the investment.

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The Answer of Book & Bible Bookstore desires to buy a new coding machine to help control book inventories.The machine sells for $36,586 and requires working capital of $4,000.Its estimated useful life is five years and will have a salvage value of $4,000.Recovery of working capital will be $4,000 at the end of its useful life.Annual cash savings from the purchase of the machine will be $10,000.Ignore income taxes.Required:
a.Compute the net present value at a 14 percent required rate of return.
b.Compute the internal rate of return.
c.Determine the payback period of the investment.

Book & Bible Bookstore Desires to Buy a New Coding