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

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