Determine payback period and accounting rate of return

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Terra Networks is planning to buy injection molding machinery costing $180,000. This machinery’s expected useful life is 5 years. They require a minimum rate of return of 8%, and have calculated the following data pertaining to the purchase and operation of this machinery:

Year Estimated Annual Cash Inflows Estimated Annual Cash Outflows Depreciation

1 $ 40,000 $8,000 $28,000

2 $50,000 $18,000 $28,000

3 $75,000 $22,000 $28,000

4 $105,000 $35,000 $28,000

5 $110,000 $50,000 $28,000

1. Determine Terra's payback period, accounting rate of return, and NPV for this investment?

Reference no: EM131059223

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