Calculate company average accounting return over the past

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Reference no: EM133335806

Question: Moncton Motors Inc. has recently bought an asset costing $625,000. The asset assumes a useful of 4-year, $80,000 salvage value, and is depreciated on a straight-line method. It is reported that the company posted net income of $20,000, $25,500, $20,000, and $21,000 over the last four years. Calculate the company's average accounting return over the past four years based on the information given above (Show all necessary calculations.)

Pinto Corp. is considering the purchase of a major piece of equipment for its Winnipeg manufacturing plant. The project would cost $22m in initial investment and would result in cost savings, before tax, of $3.25m per year for five years. The equipment could be sold for $4.5m at the end of the five years. The company's CCA rate is 25% and the corporate tax rate is 34%. The company's required rate of return is 11%. Using the tax shield approach, work out the NPV for Pinto's project.

Reference no: EM133335806

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