Use the data in Exercise 12-42 for Irv Nelson, Inc., and MACRS. The asset qualifies as a

Question:

Use the data in Exercise 12-42 for Irv Nelson, Inc., and MACRS. The asset qualifies as a 5-year property.

Pre-tax Net Pre-tax Net Cash Cash Year Inflow Year Inflow 50,000 300,000 80,000 270,000 3 120,000 240,000 200,000 4 120,

Use the data in Exercise 12-42 for Irv Nelson, Inc.,

Required

Compute for the investment its:

1. Payback period under the assumption that the cash inflows occur evenly throughout the year.

2. Book rate of return based on: (a) the initial investment, and (b) an average investment (calculated as a simple average of the 10 average annual book values).

3. Net present value (NPV).

4. Internal rate of return (IRR).

5. Modified internal rate of return(MIRR).

Net Present Value
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at... Internal Rate of Return
Internal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment... Payback Period
Payback period method is a traditional method/ approach of capital budgeting. It is the simple and widely used quantitative method of Investment evaluation. Payback period is typically used to evaluate projects or investments before undergoing them,...