The project of G-Depress has the following information about the project: Assume straight-line depreciation to zero....

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The project of G-Depress has the following information about the project: Assume straight-line depreciation to zero....

The project of G-Depress has the following information about the project:

Assume straight-line depreciation to zero. Initial investment= $20; life= 5 years; pretax sales= $20 per year; Total operating costs= 5; tax rate= 34%; No Salvage Value. Required NWC is $15. What is the NPV of this project, if discount rate is 11%?

$6.5
$8.2
$9.7
$13.7
$15.5

8. Given the numbers in the previous example, calculate the average accounting return. à 29.04%

NI= 7.26

AVR assets= 25

AAR= 0.2904

business finance

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Answer 1

Answer #1

YEAR Cash flow -$35 S11 $11 pv @ 11% 1.000 0.9009 0.8116 0.7312 0.6587 0.5935 discounted cash flows -$35.00 $10.14 $9.14 $8.2 7.26 Average net income (20-5-4) *0.66 Average investment [20/2] Average Accounting rate 7.26/10 72.60%

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