Techno Labs, a taxpaying entity, estimates that it can save $33,000 a year in cash operating costs for the next 8 years if it buys a special-purpose eye-testing machine at a cost of $140,000. No terminal disposal value is expected. Techno Labs' required rate of return is 14%. Assume all cash flows occur at year-end except for initial investment amounts. Techno Labs uses straight-line depreciation. The income tax rate is 31% for all transactions that affect income taxes. 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 the following for the special-purpose eye-testing machine: a. Net present value (NPR) (Round interim calculations and your final answers to the nearest whole dollar. Use a minus sign or parentheses for a negative net present value.) The net present value is 132,052 Requirements X b. Payback period (Round your answer to two The number of years for the payback period is 1. Calculate the following for the special-purpose eye-testing machine: c. Internal rate of return (Round the rate to two a. Net present value The internal rate of return (IRR) is b. Payback period c. Internal rate of return d. Accrual accounting rate of return based on d. Accrual accounting rate of return based on net initial investment X.XX%.) e. Accrual accounting rate of return based on average investment Based on the net initial investment, the accrua 2. How would your computations in requirement 1 be affected if the special-purpose machine had a e $13,000 terminal disposal value at the end of 8 years? Assume depreciation deductions are e. Accrual accounting rate of return based on a based on the $140,000 purchase cost and zero terminal disposal value using the straight-line X.XX%.) method. Answer briefly in words without further calculations. Based on average investment, the accrual acd Requirement 2. How would your computations based on the $140,000 purchase cost and zero years? Assume depreciation deductions are Print Done NPV would increase because the disposal value results in an increase in the total present value of cash inflows Payback would not change because the disposal value does not affect the total present value of cash inflows. IRR would increase because the disposal value results in an additional cash inflow. AARR would increase because the disposal value results in an increase in average annual operating income, under either method. Requirement 1. Calculate the following for the special-purpose eye-testing machine: a. Net present value (NPR) (Round interim calculations and your final answers to the nearest whole dollar. Use a minus sign or parentheses for a negative net present value.) The net present value is 132,052 b. Payback period (Round your answer to two decimal places.) The number of years for the payback period is 4.24 c. Internal rate of return (Round the rate to two decimal places, X.XX%.) The internal rate of return (IRR) is 4.97%. d. Accrual accounting rate of return based on net initial investment (Round interim calculations to the nearest whole dollar. Round the rate to two decimal places, X.XX%.) Based on the net initial investment, the accrual accounting rate of return (AARR) is 5.36 % e. Accrual accounting rate of return based on average investment (Round interim calculations to the nearest whole dollar. Round the rate to two decimal places, X.XX%.) Based on average investment, the accrual accounting rate of return (AARR) is 21 % Requirement 2. How would your computations in requirement 1 be affected if the special-purpose machine had a $13,000 terminal disposal value at the end of 8 years? Assume depreciation deductions are based on the $140,000 purchase cost and zero terminal disposal value using the straight-line method. Answer briefly in words without further calculations. NPV would increase because the disposal value results in an increase in the total present value of cash inflows. Payback would IRR would not change because the disposal value does not affect the total present value of cash inflows. increase because the disposal value results in an additional cash inflow. increase because the disposal value results in an increase in average annual operating income, AARR would under either method