Chapter 12 Homework @ Saved 8 772 points eBook 8 Hint G References Gravina Company is planning to spend $6,000 for a machine that it will depreciate on a straight-line basis over 10 years with no salvage value. The machine will generate additional cash revenues of $1,200 a year. Gravina will incur no additional costs except for depreciation. Its income tax rate is 35%. (For parts 3 and 4 of this question use Table 1 and Table 2.) Required: 1. What is the payback period of the proposed investment under the assumption that the cash inflows occur evenly throughout the year? Note: Round your answer to 1 decimal place. 2. What is the accounting (book) rate of return (ARR) based on the initial investment outlay? Note: Round your answer to 1 decimal place. 3. What is the maximum amount that Gravina Company should invest if it desires to earn an internal rate of return (IRR) of 15%? Note: Round your final answer to the nearest whole dollar amount. 4. What is the minimum annual (pretax) cash revenue required for the project to earn a 15% internal rate of return? Note: Round your intermediate calculations and final answer to the nearest whole dollar amount. 4. Payback period years 2. Book rate of return % 3. Maximum amount 4. Minimum annual (pretax) 8 of 13 Next > Help Save & Exit Submit