Short Answer
Capital budgeting computations
A project costing $80,000 has an estimated life of 3 years and no salvage value.The estimated net income and net after tax cash flows from the project are as follows: 
The company's minimum desired rate of return for discounted cash flow analysis is 10%.The present value of $1 at compound interest of 10% at 1,2,and 3 years is 0.909,0.826,and 0.751 respectively.The present value of a $1 annuity for three years at 10% is 2.487.The company uses straight-line depreciation.
Compute
(a)Net present value of the project _________________________.
(b)The rate of return on average investment __________________.(rounded)
Calculations
Correct Answer:
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(a)$26,910...View Answer
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