Compute payback period

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Reference no: EM133056228

You are considering a project that will cost $99.

The project that you are considering will produce revenue of $40 for the next 5 years. Total operating costs are $5 per year and total depreciation is 25% of its initial cost per year for the first 4 years, at which time the asset will be fully depreciated. You plan to sell the asset in year 5 for $8. The tax rate for your firm is 30%. Using the above information, compute payback period, IRR, and the NPV profile in Excel.

When creating your NPV profile, use interest rates from 2% to 16%, in increments of 2%. Clearly illustrate all provided information in your Excel spreadsheet.

Reference no: EM133056228

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