Question

Based on the information provided in the proforma statement shown below, compute the Net Present Value, the Internal Rate of Return, the Cash Payback and the Accounting Rate of Return.

                                        Acme International
                                        Proforma Income Statements

                                                    Year 1                Year 2                Year 3                Year 4                Year 5                Year 6

Sales revenue                              $580,000.00      $609,000.00      $639,400.00      $671,000.00       $745,500.00      $782,000.00
Less: Operating expenses          $320,000.00      $336,000.00      $352,800.00      $370,400.00       $389,000.00    $408,500.00
Less: Depreciation expense       $60,000.00         $60,000.00       $60,000.00       $60,000.00         $60,000.00       $60,000.00
Net income                                  $200,000.00       $213,000.00      $226,600.00      $240,600.00       $296,500.00    $313,500.00

Initial cost of the investment:                      $600,000.00

Salvage value at the end of year 6:            $60,000.00

Solution Preview

This material may consist of step-by-step explanations on how to solve a problem or examples of proper writing, including the use of citations, references, bibliographies, and formatting. This material is made available for the sole purpose of studying and learning - misuse is strictly forbidden.

Finance Question

This is only a preview of the solution. Please use the purchase button to see the entire solution

Related Homework Solutions

Business Questions
Homework Solution
$90.00
Business
Finance
Mathematics
Statistics
Computation
Models
Data
Prices
Binomial Distribution
Payment Stream
Swiss Market Index
Differences
Purchase Price Allocation
Homework Solution
$90.00
Purchase
Price
Allocation
Business
Finance
Agri Panel
Wang
Associates
Brand
Customer
Relationship
Pattern
Finance Questions
Homework Solution
$50.00
Business
Finance
Microsoft Excel
Money
Variables
Bank Accounts
Loan
Payment
Deposit
Percentage
Retirement
Finance Questions
Homework Solution
$30.00
Finance
Questions
Business
Net
Present
Value
Cash
Flows
Discount
Rate
Decimal
Points
Internal
Return
Definition
Project
Investors
Get help from a qualified tutor
Live Chats