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Homework answers / question archive / Initial investment $ 12,950 Estimated life 10 years Annual cash inflows $ 3,000 Cost of capital 12% I have to use Microsoft Excel to calculate and analyze the Net Present Value (NPV), Internal Rate of Return (IRR), Accounting Rate of Return and Payback Period of the following investment
Initial investment
$ 12,950
Estimated life
10 years
Annual cash inflows
$ 3,000
Cost of capital
12%
I have to use Microsoft Excel to calculate and analyze the Net Present Value (NPV), Internal Rate of Return (IRR), Accounting Rate of Return and Payback Period of the following investment
Computation of the accounting rate of return (ARR):-
ARR = Annual cash flows / Initial investment
= $3,000 / $12,950
= 23.17%
Computation of the payback period:-
Payback period = Initial investment / Annual cash flows
= $12,950 / $3,000
= 4.32 years
