Average rate of return, net present value, internal rate of return, & payback period
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 Net Cash Flow
1 $ 65,000 $ 240,000
2 92,000 260,000
3 100,000 160,000
4 52,600 70,000
Total $ 309,600 $ 730,000
Please help!!
The company’s minimum desired rate of return is 12%. The present value at compound interest of 12% for 1, 2, 3, and 4 years is .893, 797, 712, and .636 respectively.
Determine:
A.) Average Rate of Return (giving effect to depreciation on the investment)
B.) Net Present Value
C.) Internal Rate of Return
D.) Payback Period