Use the data in exercise 12-48 for Rob Jensen, Inc., and MACRS. The asset qualifies as a
Question:
Use the data in exercise 12-48 for Rob Jensen, Inc., and MACRS. The asset qualifies as a 5-year property.
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| 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)
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at... Internal Rate of Return
Internal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment...
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Step by Step Answer:
Given data Use the data in exercise 1248 for Rob Jensen Inc and MACRS The asset qualifies as a 5year property Pretax Net Pretax Net Cash Cash Year Inflow Year Inflow 1 65000 6 300000 2 80000 7 270000 ...View the full answer
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Related Book For 
Cost Management A Strategic Emphasis
ISBN: 978-0078025532
6th edition
Authors: Edward Blocher, David Stout, Paul Juras, Gary Cokins
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