Calculate the accounting rate of return

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You are considering purchasing a new production facility in order to expand operations. The building and machinery will cost $800,000 and be depreciated over 10 years using the straight-line method with no salvage value at the end of the equipment-life. You require a 12% rate of return on the project.

The cost and revenue information follows in the table below

Determine the NPV of the new facility.

Calculate the IRR (approximate).

Calculate the payback period.

Calculate the accounting rate of return.

Taking into considerations all of the calculations above, will you invest in the new production facility? Why or why not? What nonfinancial information will you consider in your decision?

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In the given assignment, calculated NPV of the project , Internal rate of return, average rate of return and payback period. i have also discussed about financial factor which should be consider while deciding the acceptance of any project.

Reference no: EM13825010

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