Sycamore Industries has provided the following information on a proposed project:
$$\begin{array} { | l | l | }
\hline \text { Initial net investment cost of project } & \$ 140,000 \
\hline \text { Annual cash inflows } & \$ 20,000 \
\hline \text { Salvage value } & \$ 0 \
\hline \text { Useful life of project } & 10 \text { years } \
\hline \text { Required rate of return } & 10 \% \
\hline \text { Straight-line depreciation per year } & \$ 14,000 \
\hline
\end{array}$$
a.What is the payback period for the investment?
b.What is the simple rate of return on the investment?
c.What is the internal rate of return on the investment?

Question

Sycamore Industries has provided the following information on a proposed project:
 $$\begin{array} { | l | l | } 
\hline \text { Initial net investment cost of project } & \$ 140,000 \
\hline \text { Annual cash inflows } & \$ 20,000 \
\hline \text { Salvage value } & \$ 0 \
\hline \text { Useful life of project } & 10 \text { years } \
\hline \text { Required rate of return } & 10 \% \
\hline \text { Straight-line depreciation per year } & \$ 14,000 \
\hline
\end{array}$$ 
a.What is the payback period for the investment?
b.What is the simple rate of return on the investment?
c.What is the internal rate of return on the investment?

Quizplus · Accepted Answer

The Answer of Sycamore Industries has provided the following information on a proposed project:
 $$\begin{array} { | l | l | } 
\hline \text { Initial net investment cost of project } & \$ 140,000 \
\hline \text { Annual cash inflows } & \$ 20,000 \
\hline \text { Salvage value } & \$ 0 \
\hline \text { Useful life of project } & 10 \text { years } \
\hline \text { Required rate of return } & 10 \% \
\hline \text { Straight-line depreciation per year } & \$ 14,000 \
\hline
\end{array}$$ 
a.What is the payback period for the investment?
b.What is the simple rate of return on the investment?
c.What is the internal rate of return on the investment?

Sycamore Industries Has Provided the Following Information on a Proposed