Metro Car Washes, Inc. is reviewing an investment proposal. The initial cost as well as the estimate of the book value of the investment at the end of each year, the net after-tax cash flows for each year, and the net income for each year are presented in the following schedule. The salvage value of the investment at the end of each year is equal to its book value. There would be no salvage value at the end of the investments life.

Year	Initial Cost and Book Value					Annual Net After-Tax Cash Flows					Annual Net Income
0		$	405,000
1			270,000				$	170,000				$	35,000
2			162,000					145,000					37,000
3			81,000					120,000					39,000
4			27,000					95,000					41,000
5			0					70,000					43,000

Management uses a 12 percent after-tax target rate of return for new investment proposals.

Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.)

Required:

1. Compute the projects payback period. Assume that the cash flows in years 1 through 5 occur uniformly throughout each year. (Round your answer to 2 decimal places.)

PAYBACK PERIOD___________YEARS

2. Calculate the accounting rate of return on the investment proposal. Base your calculation on the initial cost of the investment. (Round your "Percentage" answer to 2 decimal place (i.e., .1234 should be entered as 12.3).)

ACCOUNTING RATE OF RETURN___________%

3. Compute the proposals net present value.

NET PRESENT VALUE __________

Future Value and Present Value Tables 121 Futre ot a Srle d 4702727075002 778 Table I 1 11 Pret Ve erk RS