Calculate (a) net present value, (b) payback period, and (c) internal rate of return.

Sara's Bakery plans to purchase a new oven for its store. The oven has an estimated useful life of 4 years. The estimated pretax cash flows for the oven are as shown in the table that follows, with no anticipated change in working capital. Sara's Bakery has a 14% after-tax required rate of return and a 35% income tax rate. Assume depreciation is calculated on a straight-line basis for tax purposes using the initial investment in the oven and its estimated terminal disposal value. Assume all cash flows occur at year-end except for initial investment amounts. (Click the icon to view the estimated cash flows for the oven.) Present Value of $1 table Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table Read the requirements Requirement 1. Calculate (a) net present value, (b) payback period, and (c) internal rate of return Reference x a. Net present value. (Use factors to three decimal places, X.XXX. Round intermediary calculations and your final answer to the nearest whole dollar.) The net present value is 12% 16% Data Table 10% 0.909 0.826 0.751 0.683 0.621 B D E Present Value of $1 Periods 2% 4% Period 1 0.980 0.962 Period 2 0.961 0.925 Period 3 0.942 0.889 Period 4 0.924 0.855 Period 5 0.906 0.822 Period 6 0.888 0.790 Period 7 0.871 0.760 Period 8 0.853 0.731 Period 9 0.837 0.703 Period 10 0.820 0.676 Period 11 0.804 0.650 F 6% 0.943 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 0.558 0.527 107 8% 0.926 0.857 0.794 0.735 0.681 0.630 0.583 0.540 0.500 0.463 0.429 14% 0.877 0.769 0.675 0.592 0.519 0.456 0.400 0.351 0.308 0.270 0.237 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322 0.287 0.564 18% 0.847 0.718 0.609 0.516 0.437 0.370 0.314 0.266 0.225 0.191 0.162 0.862 0.743 0.641 0.552 0.476 0.410 0.354 0.305 0.263 0.227 0.195 1 Relevant Cash Flows at End of Each Year 2 Year 0 Year 1 Year 2 Year 3 Year 4 0.513 0.467 0.424 0.386 0.350 $ (185,000) 3 Initial oven investment Annual cash flows from operations 4 (excluding the depreciation effect) Cash flow from terminal disposal of 5 Joven Anzon $ 77,000 $ 77,000 $ 77,000 $ 77,000 $ 6,000 Print Done Print Done Clear All Check