Northeastern University Operations And Supply Chain Management Assignment Help - Generic Motors

Question - Generic Motors Corporation is planning to invest $250,000 in year zero (today) in new equipment.
This investment is expected to generate net cash flows of $100,000 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?
NPV = $__________________

Should the firm invest, based on NPV? (1=yes, 2=no) ________________

b) What is the payback period for this project?
payback period = _________________ years

c) What is the modified payback period for this project?
-between 1 and 2 years
-between 2 and 3 years
-between 3 and 4 years

d) What is the accounting rate of return (ARR) for t ...Read More his project?
To compute ARR, first compute:

annual depreciation=$_____________
annual income=$______________
average investment=$____________
ARR = ______________ % (enter say 10% as 10, not as 0.1 and not as 10%) ...Read Less

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