# Average rate of return, cash payback period, net present value method Southwest Transportation Inc. is considering a distribution facility at a cost of \$10,000.000.The facility has an estimated life of 10 years and a \$2,000.000 residual value. It is expectedto provide yearly net cash flows of \$2,500,000. The company’s minimum desired rate ofreturn for net present value analysis is 15%. Compute the following: a. The average rate of return, giving effect to straight-tine depreciation on the investment.Round to one decimal place. b. The cash payback period. c. The net present value. Use the table of the present value of an annuity of \$1 appearing inExhibit 5,

### Survey of Accounting (Accounting I)

8th Edition
Carl Warren
Publisher: Cengage Learning
ISBN: 9781305961883

### Survey of Accounting (Accounting I)

8th Edition
Carl Warren
Publisher: Cengage Learning
ISBN: 9781305961883

#### Solutions

Chapter
Section
Chapter 15, Problem 15.14E
Textbook Problem

## Expert Solution

### Want to see the full answer?

Check out a sample textbook solution.See solution

### Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

See Solution

*Response times vary by subject and question complexity. Median response time is 34 minutes and may be longer for new subjects.