Mouser Company is evaluating a capital expenditure proposal with the following predicted cash flows:
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Initial investment:
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$110,000
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Operations:
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Year 1
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$40,000
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Year 2
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30,000
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Year 3
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55,000
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Salvage value:
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-0-
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Discount rate
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12%
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Required: Determine the following values:
a. Net present value of the investment at a discount rate of 12 percent, using a spreadsheet or financial calculator
b. Payback period
c. Accounting rate of return using average investment