Question
please answer all parts and show all work The partnership of Michele and Mark is considering the following long-term capital investment proposal. Relevant data on
please answer all parts and show all work
The partnership of Michele and Mark is considering the following long-term capital investment proposal. Relevant data on the project is listed below. Salvage value is expected to be zero for the project. Depreciation is computed by the straight-line method. The companys rate of return is the companys cost of capital which 12%.
|
| Brown |
|
Capital Investment |
| $200,000.00 |
|
|
|
|
|
Annual Net Income: |
|
|
|
Year 1 |
| $25,000.00 |
|
Year 2 |
| $16,000.00 |
|
Year 3 |
| $13,000.00 |
|
Year 4 |
| $10,000.00 |
|
Year 5 |
| $8,000.00 |
|
Total |
| $72,000.00 |
|
Required:
Compute the cash payback period for the project. (round to two decimal places)
Compute the net present value for the project (round to the nearest dollar)
Compute the annual rate of return for the project.
Compute the profitability index for the project.
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