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Discuss what is the payback period for this project

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Generic Motors Corporation is planning to invest $200,000in year zero (today) in new equipment. This investment is expected to generate net cash flows of $80,000a year for the next 4 years (years 1-4). The salvage value after 4 years is zero. The discount rate (cost of capital) is 20% a year.

a) What is the net present value (NPV) of this project?

b) What is the payback period for this project? 

payback period =

What is the accounting rate of return (ARR) for this project?

To compute ARR, first compute:

annual depreciation=$
annual income=$
average investment=$
ARR = %

Reference no: EM131787933

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