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PTER 16 HOMEWORK Help Save & Exit Submit Required information The following information applies to the questions displayed below The management of Niagra National Bank is considering an investment in automatic teller machines. The machines would cost $124,200 and have a useful life of seven years. The bank's controller has estimated that the automatic teller machines will save the bank $27,000 after taxes during each year of their life (including the depreciation tax shield). The machines will have no salvage value. f 3 Use Anpendix A for your reference. (Use appropriate factor(s) from the tables provided.) 3. Which of the following statements are true? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. 2 The net-present-value method is preferable to the payback method. 7 The payback method is preferable to the net present-value method. 2 The payback period criterion fails to account for the time value of money 7 f management uses the payback method, the investment will e approved only f the required payback period meets or exceeds the years calculated. Allegience Insurance Company's management is considering an advertising program that would require an initial expenditure of $165,500 and bring in additional sales over the next five years. The projected additional sales revenue in year 1 is $75,000, with associated expenses of $25,000. The additional sales revenue and expenses from the advertising program are projected to increase by 10 percent each year. Allegience's tax rate is 40 percent. (Hint: The $165,500 advertising cost is an expense) Use Apnendix A for your reference. (Use appropriate factor(s) from the tables provided.) Required: 1. Compute the payback period for the advertising program. 2. Calculate the advertising program's net present value, assuming an after-tax hurdle rate of 10 percent. (Round your intermediate and final answers to the nearest whole dollar.) 1. Payback period 2. Net present value 3 years