Graded 22-1 Question 6 - Please fill in Blanks

6. Anna'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. Anna's Bakery has a 14% after-tax required rate of return and a 33% 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. 28(Click the icon to view the estimated cash flows for the oven.) Present Value of $1 table2e Present Value of Annuity of $1 table 30 Future Value of $1 table Future Value of Annuity. of $1 table 32 Read the requirements Requirement 1. Calculate (a) net present value, (b) payback period, and (c) internal rate of retum. 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 b. Payback period. (Round your answer to two decimal places.) The payback period in years is C. Internal rate of return. (Round intermediary calculations to the nearest whole doilar and round the IRR to two decimal places, X.XX%.) The internal rate of return (IRR) is %. Requirement 2. Calculate accrual accounting rate of return based on net initial investment. (Round intermediary calculations to the nearest whole dollar. Round the final rate to two decimal places, X.XX%.) Based on net initial investment, the accrual accounting rate of retum (AARR) is % 28: Data Table A 1 B D E F Relevant Cash Flows at End of Each Year Year o Year 1 Year 2 Year 3 Year 4 $ (90,000) N 3 Initial oven investment Annual cash flows from operations 4 (excluding the depreciation effect) 5 Cash flow from terminal disposal of oven $ 36,000$ 36,000 $ 36,000 $ 36,000 $ 10,000