June CoIs Evaluating a Project Requiring a Capital Expenditure of $620,000

question 60

Essay

June Co.is evaluating a project requiring a capital expenditure of $620,000.The project has an estimated life of four years and no salvage value.The estimated net income and net cash flow from the project are as follows:
? $\begin{array}{rrr}\text { Year }&\text {Net Income}&\text { Net Cash Flow }\\1 & \$ 45,000 & \$ 200,000 \\2 & 85,000 & 240,000 \\3 & 5,000 & 160,000 \\4 & 15,000 & 170,000 \\& \$ 150,000 & \$ 770,000\end{array}$ ?
The company's minimum desired rate of return is 12%.The present value of $1 at compound interest of 12% for 1, 2, 3, and 4 years is 0.893, 0.797, 0.712, and 0.636, respectively.
Determine: (a) the average rate of return on investment, giving effect to depreciation on the investment, and (b) the net present value.

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Definitions:

Informal Structure

The unofficial relationships and patterns of interaction that exist within an organization, which are not outlined in the organizational chart.

Rapid Change

Quick and significant transformations that occur within a short time frame in society, technology, or the environment.

Network Structure

Network structure refers to the arrangement of elements within a network, describing how nodes (individuals, organizations, devices) are interconnected with each other, influencing information flow and network efficiency.

Mobile-based Money Exchange

Financial services that allow users to perform monetary transactions through mobile devices, often without the need for a traditional bank account.