(a) An initial investment of $120,000 is expected to generate an annual cash inflow of $30,000 for...
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(a) An initial investment of $120,000 is expected to generate an annual cash inflow of $30,000 for 6 years each. Depreciation is allowed on a straight-line basis and the salvage value at the end will be $5000. What will be its average accounting rate of return? Would you like to invest in this project if you have borrowed money at 5%, explain? (b) What would be the payback period, if, for the same investment in Part (a), your cash inflow is $25,000, $25,500, $30,00
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