Answer:
Payback period = 3.6 years
Annual rate of return = 11.50%
NPV = 243.59
Explanation:
The payback period: The estimated number of years it will take the initial cost to be recouped.
Payback period= initial cost/ Net cash inflow
= 183,600/51,000
= 3.6 years
Annual rate of return is the average annual income as a percentage of average investment
Annual rate of return = annual net income/ average investment
Average investment =( Initial,cost + scrap value)/2
= (183,600 + 0)/2 = 91,800
Annual rate of return = (10,557/91,800)× 100
= 11.50%
Net Present Value = The present value of cash inflow less the initial cost
PV of cash inflow = A × (1- (1+r)^(-n))/r
= 51,000 × (1- (1.12)^(-5)/0.12
= 183,843.59
NPV = 183,843.59 - 183,600
= 243.59
