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Intel Year 0 1 2 3 4 5 Initial Investment $1,800,000 Depreciation @ 12% $216,000 $216,000 $216,000 $216,000 $216,000 Book Value at Year-End $1,800,000 $1,584,000
Intel
Year | 0 | 1 | 2 | 3 | 4 | 5 |
Initial Investment | $1,800,000 | |||||
Depreciation @ 12% | $216,000 | $216,000 | $216,000 | $216,000 | $216,000 | |
Book Value at Year-End | $1,800,000 | $1,584,000 | $1,368,000 | $1,152,000 | $936,000 | $720,000 |
Cash Flows | $300,000 | $350,000 | $300,000 | $250,000 | $200,000 | |
Profit | $84,000 | $134,000 | $84,000 | $34,000 | -$16,000 | |
ARR (%) | 4.67% | 9.78% | 6.14% | 2.89% | -2.22% | |
Payback (years) | 4.6 | |||||
NPV @ 10% | $75,000 |
Requirements:
- Calculate the ARR, payback period, and NPV.
- Evaluate the investment's financial feasibility.
- Provide a recommendation.
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