Ask Experts Questions for FREE Help !
Ask
    tlanier3's Avatar
    tlanier3 Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Oct 22, 2008, 10:13 PM
    Net Present Value, Payback, and Average Rate of Return
    How would I find Net Present Value, Payback, and Average Rate of Return given the following information?

    You are considering the purchase of a speech recognition-dictation system for work.

    A firm requires an up-front payment of $250,000. And an annual maintenance payment of $37,000 at the time the contract is signed. Thereafter, maintenance payments of $37,000 are made at the beginning of each anniversary year for a total of 5 maintenance payments (including the initial payment made at the time of purchase.

    Installation and other initial set-up costs are estimated at $50,000. For the product, and the vendor quoted on-site training of medical staff will cost $5,000. And will occur at the time of implementation. No ongoing training costs were noted because the initial training includes the "training of a trainer."

    Use of the document imaging system will reduce the need for 3 transcriptionists and office space representing savings at year-end of $105,000. Per year. The CFO states that he can earn 5% interest on the hospital's funds. He will not consider any project that yields less than a 20% return. Cost Accounting states the useful life of this acquisition is 5 years.

    Calculate:
    *Net Present Value
    *Payback
    *Average Rate of Return

Check out some similar questions!

Average rate of return, net present value, internal rate of return, & payback period [ 3 Answers ]

CAM Company is evaluating a project requiring a capital expenditure of $619,200. The project has an estimated life of four years and no salvage value. The estimated net income and net cash flow from the project are as follows: Year Net Income ...

Internal rate of return, net present value, return on invextment [ 1 Answers ]

what do we mean by internal rate of return, net present value and average annual return on investments? What do they imply? And, how are they computed?

Net Present Value and Internal Rate of Return Method [ 1 Answers ]

I want to know if an investment during the past four years have earned at least a 12% return. a) A small building was purchased for $50,000.00. Received rental income of $8,000.00 for each of the four years and sold the building this year for $55,000.00. Using the net present value method,...

View more questions Search
 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.