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The Rango Company is considering a capital investment for which the initial outlay is $ 20,000. Net annual cash flow (before taxes) are predicted to
The Rango Company is considering a capital investment for which the initial outlay is $ 20,000. Net annual cash flow (before taxes) are predicted to be $4,000 for 10 years. Straight line depreciation is to be used, with an estimated salvage value of zero. Ignoring income taxes compute the items listed below 1. Payback period 2. Accounting rate of return (ARR) 3. Net present value (NPV), assuming a cost of capital (before tax) of 12 percent 4. Internal rate of return (IRR)
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