Chapter 11 Lab, loosely based on PB 11-4, page 506 ter formulas or descriptions in these fields Given Data: PB 11-4 part for ARR, Payback and IRR A. ARR, Accounting Rate of Return Initial Investment S860,000 Useful Life Annual Net Income S66,000 Cost of Capital (Use as Hurtle rate) Salvage Value ARR 6 Years 11% Calculation of cash flow needed for B thru D, you do need the salvage value S60,000 Net Income Depreciation Cash Inflow Add back non cash expenditures (straight line) Add'l data for NPV Calculation only Working capital S20,000 B. Payback Period Years C. Net Present Value (Calculate below Discount Present Item Years Cash flow Factor Value ally always belong at the top NET PRESENT VALUE Initial Investment Annual Inflow Working Capital Working Capital Salvage Value Totals actu ince it's really what you want to see first D. Internal Rate of Return Cash flows by year Use excel IRR formul Year Year 1 Year 2 Year 3 Year 4Year 5 Year 6 oK, you oK, you oK, you Not this d IRR Year Total