How would we solve question D. E. and F.

Chapter 12 Quiz - Word adam se Design Layout References Mailings Review View Help Search - 10-A A Aa A - X X APA- E E3 21 IE - AaBbCd AaBbCd AaBb 1 Normal 1 No Spac... Heading 1 AaBbcc AaB Heading 2 Title Find che Rep A Sele Editin Fant Paragraph Styles 1. Home Growers is investigating a project in which it would purchase a new greenhouse for $300,000. The greenhouse would generate $30,000 in increased net income per year for 10 years. Home Growers uses straight-line depreciation. At the end of 10 years, the expected residual value of the greenhouse is $50,000. Home Grower's required rate of return is 9% Management of Home Growers requires a requires a 5 year payback period. (10 points) a. What is the annual depreciation of the project? Calculated as (300,000 - 50,000)/10 years = An annual depreciation of $25,000 for the project b. What is the annual net cash flow of the project? The annual Cash Flow is 25000 + 30000 = To an annual cash flow of $55,000 C. Compute the payback period. Based on the payback period alone is the project acceptable? The Payback period is (300,000/55,000) = 5.45 years to repay the initial investment as this is not acceptable for the project as it is less than the required payback period of 5 years. d. Compute the average annual rate of return. Based upon this measure alone is the project acceptable? The annual rate of return is e Compute the NPV of the project. Based upon this measure alone is the project acceptable? f Compute the Excess Present Value Index. Based on this measure alone is the project acceptable? Focus of $59W