The following capital budgeting proposal: $100,000 initial cost,
to be depreciated straight-
line over 5 years to an expected salvage value of $5,000, 35% tax
rate, $45,000 additional
annual revenues, $15,000 additional annual expense, $8,000
additional investment in
working capital, and 10% cost of capital. Calculate the following
methods.
1. NPV
2. Payback period
3. Modified IRR, a required rate of return is 12%
4. Briefly compare and contrast the NPV, Payback period and MIRR
criteria,
What are the advantages...