# Great Plains Transportation Inc. is considering acquiring equipment at a cost of \$148,000

April 14, 2018

Average Rate of Return, Cash Payback Period, Net Present Value MethodGreat Plains Transportation Inc. is considering acquiring equipment at a cost of \$148,000. The equipment has an estimated life of 10 years and no residual value. It is expected to provide yearly net cash flows of \$37,000. The company’s minimum desired rate of return for net present value analysis is 15%.Present Value of an Annuity of \$1 at Compound InterestYear6%10%12%15%20%10.9430.9090.8930.8700.83321.8331.7361.6901.6261.52832.6732.4872.4022.2832.10643.4653.1703.0372.8552.58954.2123.7913.6053.3522.99164.9174.3554.1113.7843.32675.5824.8684.5644.1603.60586.2105.3354.9684.4873.83796.8025.7595.3284.7724.031107.3606.1455.6505.0194.192Compute the following:a. The average rate of return, giving effect to straight-line depreciation on the investment. If required, round your answer to one decimal place. % 30b. The cash payback period.Select2345678Item 2 yearsc. The net present value. Use the above table of the present value of an annuity of \$1. Round to the nearest dollar. If required, use a minus sign to indicate negative net present value” for current grading purpose.Present value of annual net cash flows\$Less amount to be invested\$Net present value\$

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