Question
1.George is considering the following investmentproposal: Initial investment: Depreciable assets (straight-line) $15,000 Working capital 10,000 Operations (per year for 4 years): Cash receipts $20,000 Cash
1.George is considering the following investmentproposal:
| Initial investment: | |
| Depreciable assets (straight-line) | $15,000 |
| Working capital | 10,000 |
| Operations (per year for 4 years): | |
| Cash receipts | $20,000 |
| Cash expenditures | 12,000 |
| Disinvestment: | |
| Salvage value of equipment | $2,000 |
| Recovery of working capital | 5,000 |
| Discount rate | 8 percent |
| Period
| Present Value Factor
|
| 1 | 0.92593 |
| 2 | 0.85734 |
| 3 | 0.79383 |
| 4 | 0.73503 |
Required:Determine the following values:
a. Paybackperiod
b. Accountingrate of return on average investment
c. Netpresent value
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Applications Of Accounting Information Systems
Authors: David M. Shapiro
1st Edition
194999158X, 9781949991581
