The Pink Thai Restaurant is considering the purchase of a second oven that would accommodate its new take-out business.The oven would cost $17,000,has an estimated residual value of $5,000,and would be useful for six years.Annual net cash inflows would increase by $3,960.Pink Thai uses the straight-line method of depreciation.Using the above facts and the present value factors given below,calculate the following.
a.Payback period (Round your answer to one decimal place. )
b.Accounting rate of return (Round your answer to one decimal place. )
c.Net present value of the investment based on a 15 percent minimum desired rate of return (Use parentheses to indicate a negative net present value.Round your answer to the nearest dollar,if necessary. )

Question

Quizplus · Accepted Answer

The Answer of The Pink Thai Restaurant is considering the purchase of a second oven that would accommodate its new take-out business.The oven would cost $17,000,has an estimated residual value of $5,000,and would be useful for six years.Annual net cash inflows would increase by $3,960.Pink Thai uses the straight-line method of depreciation.Using the above facts and the present value factors given below,calculate the following.
a.Payback period (Round your answer to one decimal place. )
b.Accounting rate of return (Round your answer to one decimal place. )
c.Net present value of the investment based on a 15 percent minimum desired rate of return (Use parentheses to indicate a negative net present value.Round your answer to the nearest dollar,if necessary. )

The Pink Thai Restaurant Is Considering the Purchase of a Second