SCOFIELD Corporation purchased a P3,000,000 equipment. In view of this investment, working capital is expected to increase by P 750,000. Cash inflows are expected to average P900,000 before tax over the next ten years. The company is subject to a 30% income tax. The company's cut-off rate of return is at 15%.

The PV of an annuity of P1 at the end of 10 years at: 13%- 5.426 14%-5.216 15%- 5.019 16%-4.833. 17%- 4.659 18%- 4.494 The PV value of P1 at the end of 10 years at: 13%- 0.295 14%- 0.270 15%- 0.247 16%- 0.227 17%- 0.208 18%- 0.191 REQUIREMENTS: What is the company's accounting rate of return based on average investment? What is the payback period? What is the net present value? What is the approximate discounted rate of return?

Answer rating: 100% (QA)

To solve this problem we need to calculate the following 1 Accounting Rate of Return ARR based on av... View the full answer