Book rate of return

book income
book assets

Project

C0

C1

C2

C3

Payback
Period

-2000

500

500

5000

___

-2000

500

1800

___

-2000 1800

500

___

NPV@ 10%
2, 624
58
50

Project

C0

C1

IRR

1,000

1,500

50%

364

1,000

1,500

50%

364

1500
1 r
1500
B : 1000
1 r
A : 1000

1500
1 0.5
1000
1500
1 0.5
1000

NPV @ 10%

C0
600

C1...... ......C9
120

120

C10
150

Project
C

C0
1, 000

C1
3, 000

C2

IRR

2,500 None

NPV @10%
339

Project

C0

C1

IRR

NPV @10%

10, 000

20, 000 100%

8,182

20, 000

35, 000

11,818

75%

NVP
Profitability index=
investment

1+ nominal interest rate

real interest rate =
1+inflation rate

Year Cash Flow

PV @ 10%

8000

8000x1.03=8240

8000
1.10
8240
1.102

8000x1.032 =8487.20

8487.20
1.103

6376.56

8000x1.033 =8741.82

8741.82
1.104

5970.78

7272.73
6809.92

$26, 429.99

Year

Cash Flow

PV@6.7961%

8000
1.03

= 7766.99

7766.99
1.068

7272.73

8240
1.032
8487.20
1.033
8741.82
1.034

= 7766.99

7766.99
1.068 2
7766.99
1.068 3
7766.99
1.068 4

6809.92

3
4

= 7766.99
= 7766.99

6376.56
5970.78
= $26,429.99

NPV

1,630
12,000
1.20
6,110
6
1.20

3,444
7
1.20

2,381
2
1.20

6,205
3
1.20

10,685
4
1.20

3,520 or $3,520,000

10,136
5
1.20

Year(s)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17-20
21

Tax Depreciation Schedules by Recovery-Period Class

3-Year
5-Year
7-Year
10-Year
15-Year
33.33
20
14.29
10
5
44.45
32
24.49
18
9.5
14.81
19.2
17.49
14.4
8.55
7.41
11.52
12.49
11.52
7.7
11.52
8.93
9.22
6.93
5.76
8.92
7.37
6.23
8.93
6.55
5.9
4.45
6.55
5.9
6.56
5.9
6.55
5.9
3.29
5.9
5.9
5.91
5.9
5.91
2.99

20-Year
3.75
7.22
6.68
6.18
5.71
5.28
4.89
4.52
4.46
4.46
4.46
4.46
4.46
4.46
4.46
4.46
4.46
2.23