PTGC Ltd is looking at acquiring a new investment. Based on the information supplied by the company, average annual pre-tax income and expenses for the new investment are as follows:

Capital outlay $200,000

Net Profit p.a. (before depreciation and tax) $ 90,000

Depreciation p.a. $ 40,000

Economic life: 5 years

Salvage value: Zero

Tax rate payable (assume paid in year of income): 30%

Required rate of return: 12% (WACC + Risk factor)

Using different online and software calculators like Microsoft Excel inbuilt formulas, and the present and future value tables, calculate the following:

1. Net Profit after tax for each year
2. Annual Cash Flow for each year
3. Accounting rate of return using total investment
4. Payback Period
5. Net Present Value
6. Internal Rate of Return

Answer rating: 100% (QA)

Okay here are the calculations Net Profit after tax for each year Ye... View the full answer