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Determine accounting rate of return on initial investment

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Reference no: EM133066597

Question - Roopali is considering an investment proposal with the following cash flows:

Initial investment-depreciable assets $45,000

Initial investment-working capital 5,000

Net cash inflows from operations (per year for 7 years) 10,000

Disinvestment-depreciable assets 3,000

Disinvestment-working capital 2,000

Required -

a. Determine the payback period.

b. Determine the accounting rate of return on initial investment.

c. Determine the accounting rate of return on average investment.

Reference no: EM133066597

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