Question
Shields Company has gathered the following data on a proposed investment project: Investment Required in Equipment $400,000 Annual Cash Inflows $ 80,000 Salvage Value $-0-
Shields Company has gathered the following data on a proposed investment project:
| Investment Required in Equipment | $400,000 |
| Annual Cash Inflows | $ 80,000 |
| Salvage Value | $-0- |
| Life of the Investment | 10 years |
| Discount Rate | 10% |
(Ignore income taxes in this problem.)
| A. | What is the payback period for the investment? |
| B. | What is the simple rate of return on the investment? |
| C. | What is the net present value on this investment? |
| D. | What is the internal rate of return on the investment? |
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Management Accounting
Authors: Pauline Weetman
2nd Edition
0273718452, 978-0273718451
