Cost Management: A Strategic Emphasis 7th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 54

Basic Capital-Budgeting Techniques; Uneven Net Cash Inflows with Taxes; Spreadsheet Application
Use the same information for this problem as you did for Problem 12-47, except that the discount rate is 10% (not 12%); the investment is subject to taxes; and the projected pretax operating cash inflows are as follows:

Jensen has been paying 25% for combined federal, state, and local income taxes, a rate that is not expected to change during the period of this investment. The firm uses straight-line depreciation. Assume, for simplicity, that MACRS depreciation rules do not apply.
Required Using Excel, compute the following for the proposed investment:
1. The payback period, under the assumption that the cash inflows occur evenly throughout the year.
2. The accounting (book) rate of return based on: (a) initial investment, and (b) average investment.
3. The net present value (NPV).
4. The present value payback period of the proposed investment under the assumption that the cash inflows occur evenly throughout the year.
5. The internal rate of return (IRR).
6. The modified internal rate of return (MIRR).