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Payback, Accounting Rate of Return, Net Present Value, Internal Rate of Return Follow the format...

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Accounting

Payback, Accounting Rate of Return, Net Present Value, Internal Rate of Return

Follow the format shown in EXHIBIT 14A.1 and EXHIBIT 14A.2 as you complete the requirements below. Consider the values from the table by rounding them to three decimal places.

Melnik Company wants to buy a new machine costing $900,000. The equipment will last five years with no expected salvage value. The expected after-tax cash flows associated with the project follow:

Year Cash Revenues Cash Expenses
1 $1,400,000 $1,000,000
2 1,400,000 1,000,000
3 1,400,000 1,000,000
4 1,400,000 1,000,000
5 1,400,000 1,000,000

Required:

Compute the investment's Net Present Value, assuming a required rate of return of 12 percent. Round present value calculations and your final answer to the nearest dollar. NPV = $

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