Year 0 1 2 3 4 Initial cost 90,000 Cash Flow 20 16,000 28,000 48,000 40,000 Accounting Income (28,000) 21,000 19,000 18,000 The company requires a 12% return and uses straight line depreciation for this asset with a four year useful life. They have a 3-year cut-off for payback decisions and use 20% for AAR decisions. 1) Compute the NPV and recommend action

The company requires a \12 return and uses straight line depreciation for this asset with a four year useful life. They have a 3-year cut-off for payback decisions and use 20\\% for AAR decisions. 1) Compute the NPV and recommend action 3) Compute the Average Accounting Return and recommend action 4) Compute the Profitability Index and recommend action