A capital investment project requires an investment of £350,000. It has an expected life of ten years with annual cash flows of £50,000 received at the end of each year.
Required:
a.
Compute payback for the project.
b.
Determine the accounting rate of return for the project, based on the initial capital investment.
c.
Compute the internal rate of return for the project.
d.
Compute the net present value of the project using a 14 per cent discount rate.
e.
Would you recommend this project be accepted? Why or why not?

Question

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The Answer of A capital investment project requires an investment of £350,000. It has an expected life of ten years with annual cash flows of £50,000 received at the end of each year.
Required:
a.
Compute payback for the project.
b.
Determine the accounting rate of return for the project, based on the initial capital investment.
c.
Compute the internal rate of return for the project.
d.
Compute the net present value of the project using a 14 per cent discount rate.
e.
Would you recommend this project be accepted? Why or why not?

A Capital Investment Project Requires an Investment of £350,000