Reference no: EM131029875
A company wishes to purchase a vehicle for $22,095. The useful life of this vehicle will be three years. The company estimates that the net profit before depreciation for each of the years 1-3 will be 8,500, 8,000, and 7,500, respectively. The company then plans to sell the vehicle for an estimated $4,700.
a. Find the accounting rate of return for the investment in this vehicle.
b. What is the payback period for this vehicle, to the nearest one-hundredth of a year?
c. Calculate the net present value for this investment if the discount rate is 6%.
d. To the nearest whole percentage, what is the internal rate of return if the discount rate is 6%?