Jane Pannell Ltd proposes to purchase a new machine costing $120 000. It will be sold at the end of four years for $20 000. The company depreciates machinery using the straight-line method. The machine will earn revenue of $80 000 per annum and involve additional expenditure of $46 000 each year. The company's cost of capital is 10%. 

The present value of $1 is as follows.

Required 

Calculate: 

(a) The accounting rate of return 

(b) The net present value 

(c) The internal rate of return.

Transcribed Image Text:

Year 1 2 4 10% 0.909 0.826 0.751 0.683 -15% 0.870 0.756 JONAL 0.658 0.572