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

Exercise 58

Basic Capital-Budgeting Techniques; Uneven Net Cash Inflows; MACRS Use the data in Problem 12-48 for Bob Jensen, Inc., and MACRS. The asset qualifies as a 5-year property.
Required Compute the following for the proposed investment:
1. Its payback period under the assumption that the cash inflows occur evenly throughout the year.
2. Its book rate of return based on: (a) the initial investment, and (b) an average investment (calculated as a simple average of the 10 average annual book values).
3. Its net present value (NPV).
4. Its internal rate of return (IRR).
5. Its modified internal rate of return (MIRR).