a company is evaluating a project requiring capital expenditure of 620,000. esti

Question

a company is evaluating a project requiring capital expenditure of 620,000.  estimated life of project is four years and no salvage value.  estimated net income and net cash flow from the project are

year  net income net cash

  1     45000       200000
  2     85000       240000

  3      5000        160000

  4     15000       170000

The company's minimum desired rate of return is 12%. The present value of $1 at compound interest of 12% for 1, 2, 3, and 4 years is 0.893, 0.797, 0.712, and 0.636, respectively.

- what is the average rate of return on investment, giving effect to depreciation on the investment

- what is the net present value

Explanation / Answer

a company is evaluating a project requiring capital expenditure of 620,000. esti

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