Payback Period and Accounting Rate of Return: Equal Annual Operating Cash Flows with Disinvestment (LO3)

Hoi is considering an investment proposal with the following cash flows:

Initial investment— depreciable assets... 1... 0... ee $120,000 Net cash inflows from operations (per year for 5 years)......00.0.0 .ee.e. ee e 30,000 Disinvestment —cepreciable-aSSets aa Hs. aaeauddid Gee Seles) oceeee ates nchehene nae 20,000 Required

a. Determine the payback period

b. Determine the accounting rate of return on initial investment

c. Determine the accounting rate of return on average investment LO.1