Calculate the payback period for the tractor investment

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Question - Nixon Harvesting is considering the purchase of a new tractor. The tractor costs $280,824, and has a 5-year life. The company uses the straight-line depreciation method, and the tractor has no residual value. The tractor will produce net cash inflows of $66,667 per year at the end of each year. For purposes of responding to each requirement below, you may assume no income taxes.

A. Calculate the net present value of the tractor investment, assuming an 8% rate of return.

B. Calculate the accounting rate of return for the tractor investment.

C. Calculate the internal rate of return for the tractor investment.

D. Calculate the payback period for the tractor investment.

Reference no: EM132042479

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