Compute the annual rate of return for the project

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Question - The partnership of Michele and Mark is considering the following long-term capital investment proposal. Relevant data on the project is listed below. Salvage value is expected to be zero for the project. Depreciation is computed by the straight-line method. The company's rate of return is the company's cost of capital which 12%.


Brown

Capital Investment

$200,000.00

Annual Net Income:


Year 1

$25,000.00

Year 2

$16,000.00

Year 3

$13,000.00

Year 4

$10,000.00

Year 5

$8,000.00

Total

$72,000.00

Required:

Compute the cash payback period for the project.

Compute the net present value for the project.

Compute the annual rate of return for the project.

Compute the profitability index for the project.

Reference no: EM132109047

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