Bryant Company Has Obtained the Following Data About a Possible

Essay

Bryant Company has obtained the following data about a possible planned investment:
$\begin{array}{ll}\text { Cost } & \$ 270,000 \\\text { Terminal salvage value in } 8 \text { years } & \$ 10,000 \\\text { Annual cash operating savings for } 8 \text { years (end of year) } & \$ 50,000 \\\text { Estimated useful life in years } & 8 \\\text { Minimum desired rate of return } & 10 \% \\\text { Present value of ordinary annuity of one, } 10 \%, 8 \text { periods } & 5.3349 \\\text { Present value of one, } 10 \%, 8 \text { periods } & 0.4665\end{array}$
The company uses straight-line depreciation method for financial reporting.Ignore income taxes.The cash operating savings of $50,000 do not include depreciation expense.
Required:
A) Compute the net present value of the investment.
B) Compute the payback period.
C) Compute the accounting rate of return using the initial required investment.