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Khazanchi is considering an investment proposal with the following cash flows: Initial investment - depreciable assets ........ $90,000 Initial investment - working capital......... 12,500 Net

Khazanchi is considering an investment proposal with the following cash flows:

Initial investment - depreciable assets ........ $90,000

Initial investment - working capital......... 12,500

Net cash inflows from operations (per year for 8 years) ........ 25,000

Disinvestment - depreciable assets ...... 10,000

Disinvestment - working capital 12,500

  1. Determine the payback period.
  2. Determine the accounting rate of return in initial investment.
  3. Determine the accounting rate of return on average investement.

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