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What is the net present value of this project

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Reference no: EM131115430

Generic Motors Corporation is planning to invest $225,000 in year zero (today) in new equipment. This investment is expected to generate net cash flows of $90,000 a 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.

Required:

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

b) What is the payback period for this project?

c) What is the modified payback period for this project?

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

Reference no: EM131115430

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