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

Finance Nov 20, 2020

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

Expert Solution

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

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