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Determine and calculate the payback period

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A manufacturing business is considering investing in some new equipment. The management account has estimated the future net cash flows from the investment as follows initial investment. (£1360000)

year1.             £ 470000

Year2.             £580,000

year3.             £580000

year4.               £500

this business uses straight -line depreciation and it cost of capital (the discount rate for investment appraisal is 10%). It is assumed that the new equipment will have a residual value of zero at the end of four years

required

Question 1: Calculate the payback period accounting rate of return (ARR) and the net present value (NPV) for the proposed investment

Reference no: EM132473846

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