Reference no: EM132586227

Ursus,Inc. is considering a project that would have a ten year life and would require a 1,000,000 investment in equipment. At the end of ten years,the project would terminate and the equipment would have no salvage value. The project would provide net operating income each year as follows:

Sales...2,000,000

Variable expense...1400,000

Contribution margin. 600,000

Fixed expenses 400,000

Net operating income...200,000

All of these items, except for depreciation of 100,000 a year l, represent cash flow,. The depreciation is included in the fixed expenses.The company's required rate of return is 12%.

Required:

Question a. Compute the project net present value?

Question b. Compute the projects internal rate of return to the nearest whole percent?

Question C. compute the projects payback period?

Question D. compute the projects simple rate of return?

Question E. compute the overall acceptability of the project