Practice Problem – 03 (Page: 1173)MCA Corporation is reviewing an investment proposal. The company's cost of capital is15%. The information regarding the proposal is given below.YearInitial InvestmentAnnual Cash InflowAnnual Net Income$105,0001$45,000$16,000240,00018,000335,00020,000430,00022,000525,00024,000Requirements:(a) What is the cash payback period for this proposal?(b) What is the annual rate of return for the investment? Should the company invest?(c) What is the net present value of the investment?Solution:3. (а)YearAmountBalanceInitial investment$(105.000)S(105.000)

cash pay back period is the period by which the initial investment is recovered. so it 2 years +…

Requirements: (a) What is the cash payback period for this proposal? (b) What is the annual rate of return for the investment? Should the company invest? (c) What is the net present value of the investment?

Requirements: (a) What is the cash payback period for this proposal? (b) What is the annual rate of return for the investment? Should the company invest? (c) What is the net present value of the investment?

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

10th Edition

ISBN:9781337902571

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter16: Financial Planning And Forecasting

Section: Chapter Questions

Problem 2P: AFN EQUATION Refer to Problem 16-1. What additional funds would be needed if the companys year-end...

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