The management of indiana corporation

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Reference no: EM13963576

The management of Indiana Corporation is considering the purchase of a new machine costing $400,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability of this investment:

Year	Income from Operations	Net Cash Flow
1	$100,000	$180,000
2	60,000	120,000
3	30,000	100,000
4	10,000	90,000
5	10,000	90,000

The average rate of return for this investment is

		18%
		21%
		53%
		10%

Reference no: EM13963576

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