Your company has a proposed Capital Investment. Make up your own data in the following format: Original

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Question:

Your company has a proposed Capital Investment. Make up your own data in the following format:

Original Cost of Investment: $???,???

Residual Value (make yours 0): $0

Useful Life (choose 3-10 years): ? years

Minimum acceptable Rate of Return(choose 6%,10%,12% or 15%): ??%

Net (equal) Annual Cash Flows $??,??? per year

Annual Net Income $??,??? per year

Use the following Present Value of an Annuity table for parts a, b, and d:

Year (payments)	6%	10%	12%	15%
3	2.673	2.487	2.402	2.283
4	3.465	3.170	3.073	2.855
5	4.212	3.791	3.605	3.352
6	4.917	4.355	4.111	3.784
7	5.582	4.868	4.564	4.160
8	6.210	5.335	4.968	4.487
9	6.802	5.759	5.328	4.772
10	7.360	6.145	5.650	5.019

a) Calculate the Net Present Value (NPV) of your investment using your minimum acceptable Rate of Return (please indicate “positive (+)”, or “negative (-)” with your answer).

b) Calculate the Present Value Index of your investment (round to 0.00).

c) Calculate the Present Value Factor for an Annuity (IRR factor) for your investment.

d) Based on your Factor in part c above, is your Internal rate of Return (IRR) lower or higher than your Minimum acceptable Rate of Return? Explain why.

e) Calculate your investment’s Average Rate of Return (round to 00.0%).