# Jefferson Labs , a nonprofit organization , estimates that it can save $33 090 a year in cash operating costs for the next & years if it buys

Jefferson Labs , a nonprofit organization , estimates that it can save $33 090 a year in cash operating costs

for the next & years if it buys a special-purpose eye – testing mach

testing machine at a cost

cost of $140 000 . No terminal disposal value is

expected . Jefferson Labs required rate of return is 12% . Assume all cash flows occur

at year – end except for initial investment amounts . Jefferson Labs uses straight line depreciation

resent Value of $1 table Present Value of Annuity of $1 table Future Value of ST table Future Value of Annuity of ST table

Read the requirements

Requirement 1 Calculate the following for the special – purpose eye – testing machine :

a . Net present value ( NPV ) ( Use factors to three decimal places X X X X and use a minus sign or parentheses for a negative net present value Enter the net present

I value of the investment rounded to the nearest whole dollar . )

The net present value is s

Calculate the following for the

for the special – purpose eye – testing machine

a . Net present value

b . Payback period

C . Internal rate of return

Accrual accounting rate of return based on net initial investment

Accrual accounting rate of return based on average investme

2 . What other factors should Jefferson

Labs consider in deciding whether to

purchase the special-purpose eye- testing machine ?