BAP Corporation is reviewing an investment proposal. The initial cost and estimates of the book value of the investment at the end of each year, the net cash flows for each year, and the net income for each year are presented in the schedule below. All cash flows are assumed to take place at the end of the year. The salvage value of the investment at the end of each year is equal to its book value. There would be no salvage value at the end of the investment's life.
| Investment Proposal |
| Year |
|
Initial Cost
and Book Value |
|
Annual
Cash Flows |
|
Annual
Net Income |
|
|
| 0 |
|
$104,010 |
|
|
|
|
|
|
|
|
| 1 |
|
70,190 |
|
|
$46,000 |
|
|
$12,180 |
|
|
| 2 |
|
41,590 |
|
|
40,600 |
|
|
12,000 |
|
|
| 3 |
|
20,190 |
|
|
34,200 |
|
|
12,800 |
|
|
| 4 |
|
6,570 |
|
|
30,700 |
|
|
17,080 |
|
|
| 5 |
|
0 |
|
|
24,300 |
|
|
17,730 |
|
|
BAP Corporation uses a 12% target rate of return for new investment proposals.
Calculate cash payback period, annual rate of return on investment, and net present value.