A company is considering investing in a capital project that requires an amount of $30,000 and is 6 years old, and the investment cost will be amortized for accounting and tax purposes over a period of 6 years. At a rate of $5,000 annually and without scrap, the annual net flows from the project before calculating the income tax amount to $10,000 , and the income tax rate is 40% to be paid at the end of each year, and the required annual rate of return on the project is 15%.

Required: Answer the following questions with clarification .

1- The project's accounting rate of return after tax is:

a)10% b)16.67% c)26.67% d)33.33%.

2- The amount of the payback period after income tax for the project amounts to:

a) 5 years b) 3.75 years c) 3.33 years d) 2 years.

3- The net present value of the investment project is:

a) ($7290) b) $280 c) $7850 d) $11760