Question
Payback period=6.2 years Net present value=$ 20,038 ARR =12.73% Explanation: ParticularsAmount Initial investment(551,500+12,100+400)564,000 Annual cashflows 5*52*(400-50)91,000 a) payback period= 564000/91,000 =6.2 years b)present value of
Payback period=6.2 years
Net present value=$ 20,038
ARR =12.73%
Explanation:
ParticularsAmount
Initial investment(551,500+12,100+400)564,000
Annual cashflows 5*52*(400-50)91,000
a) payback period= 564000/91,000
=6.2 years
b)present value of cashflows =91,000*6.418=584,038
Initial investment=564,000
Net present value=584,038-564,000=20,038
c)Average investment=(564,000 +36,000) /2=300,000
Annual net income=91,000-(564,000-36,000)/10=38,200
Accounting rate of return =38,200/300,000 =12.73%
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what qualitative factors might be helpful in making a final decision?
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Principles of Economics
Authors: Robert Frank, Ben Bernanke
5th edition
73511404, 978-0073511405
