An investment costing $50,000 promises an after tax cash flow of $18,000 per year for 6 years.
Question:
a. Find the investment's accounting rate of return and its payback period.
b. Find the investment's net present value at a 15% discount rate.
c. Find the investment's profitability index at a 15% rate.
d. Find the investment's internal rate of return.
e. Assuming the required rate of return on the investment is 15%, which of the above figures of merit indicate the investment is attractive? Which indicate it is unattractive?
Net Present Value
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at...
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Details Amt Investment 50000 Salvage Average InvestmentInvestmentsalvage2 25000 Total Post Tax Cash ...View the full answer
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Related Book For 
Accounting concepts and applications
ISBN: 978-0538745482
11th Edition
Authors: Albrecht Stice, Stice Swain
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