Given the following information:
Investment: $ 420,000
Estimated useful life: 7 years.
Straight line depreciation with no salvage value
Annual cash savings $ 100,000
Required to do:
Question 1. Calculate the accounting rate of return on initial investment year 1 only.
Question 2. Calculate the payback period.
Question 3. Calculate the Internal rate of return.
Question 4. Calculate the net present value using a cost of capital of 14 %.
Question 5. Calculate the after tax Net Income and after tax cash flow assuming a tax rate of 35%