Use the data in exercise 12-48 for Rob Jensen, Inc., and MACRS. The asset qualifies as a 5-year property.

 

Purchase price of machine	$ 650,000
Expected useful life in years	10
Percentage used to evaluate capital investments	$ 150,000
Combined tax rate	12%

Requirement
Compute for the proposed investment its:
1. Payback period
2. Accounting (book)rate of return (ARR) based on: (a) the initial investment, and (b) an average investment
3. Net present value (NPV)
4. Internal rate of return (IRR)
5. Modified internal rate of return (MIRR)

Pre-tax Net Cash Inflow Pre-tax Net ear ear 65,000 80,000 120,000 200,000 240,000 S 300,000 270,000 240,000 120,000 80,000 10