MNO Inc. is considering an investment project that costs $800,000. The project is expected to generate the following cash inflows:
•Year 1: $130,000
•Year 2: $150,000
•Year 3: $170,000
•Year 4: $190,000
•Year 5: $210,000
•Year 6: $230,000
The project will be depreciated straight-line over its life, and the company faces a tax rate of 25%. The required rate of return is 14%.
Required:
1.Calculate the Annual Depreciation.
2.Determine the Payback Period (PBP).
3.Calculate the Accounting Rate of Return (ARR).
4.Calculate the Net Present Value (NPV).
5.Calculate the Internal Rate of Return (IRR).