Question
A $400,000 capital investment proposal has an estimated life of four years and no residual value. The estimated net cash flows are as follows: Year
A $400,000 capital investment proposal has an estimated life of four years and no residual value. The estimated net cash flows are as follows:
| Year | Net Income | Net Cash Flow |
|
| 1 | $ 75,000 | $200,000 |
|
| 2 | 102,000 | 150,000 |
|
| 3 | 109,500 | $90,000 |
|
| 4 | 36,000 | 80,000 |
|
The minimum desired rate of return for net present value analysis is 14%. Determine: (a) the average rate of return on investment, and (b) the net present value.
(a) the average rate of return on investment
(b) the net present value
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Managerial Accounting For Undergraduates
Authors: Christensen, Theodore E. Hobson, L. Scott Wallace, James S.
1st Edition
1618531123, 9781618531124
