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GIVEN: INVESTMENT-250,000 ANNUAL NET CASH INFLOWS-100,000 COST OF CAPITAL-10% SALVAGE VALUE-10,000 (does not change from year 1 to 5) ECONOMIC LIFE-5 YEARS Tax rate-30%
GIVEN: INVESTMENT-250,000 ANNUAL NET CASH INFLOWS-100,000 COST OF CAPITAL-10% SALVAGE VALUE-10,000 (does not change from year 1 to 5) ECONOMIC LIFE-5 YEARS Tax rate-30% Working capital requirement 25000 REQUIRED: COMPUTE THE FOLLOWING a. Payback period b. Payback reciprocal c. Accounting rate of return d. Net Present Value e. Net Present Value Index f. Profitability index
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Lets compute each of the required metrics a Payback period Payback period is the time it takes for the initial investment to be recovered from the net ...
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Financial Management Theory and Practice
Authors: Eugene F. Brigham, Michael C. Ehrhardt
15th edition
130563229X, 978-1305632301, 1305632303, 978-0357685877, 978-1305886902, 1305886909, 978-1305632295
