answer 21.26 with full working out assuming no tax where the payback period = initial investment divided by annual after tax cashflow

21.26 Payback period; not present vaiue; even cash flows: bank L021 3 The management of Ballarat National Bank is considering an investment in automatic teller machines. ' The machines would cost $513 000 each and have a useful life at seven years. The bank's finance \"'7 manager has estimated that the automatic teller machines will save the bank $110 000 per machine during each year of their life. The machines will have no salvage value. Ignore company income taxes. Required: .- 1 Calculate the payback period For the proposed investment. 2 Calculate the net present value of the proposed investment, assuming a discount rate of: (a) 8 per cent. (b) 10 per cent. . __ . _ (.6132 per cent}. _ . . _' .3 What can you conclude From your answers to requirements 1 and 2 about the limitations of the payback method