Show complete solution. 4. Atty. Gacayan invested P280, 000 which will be used in a project that will produce a uniform annual revenue of P180,000 for 5 years and then have a salvage value of 16% of...

Show complete solution.

4. Atty. Gacayan invested P280, 000 which will be used in a project that will produce a
uniform annual revenue of P180,000 for 5 years and then have a salvage value of 16% of
the investment. Out-of-pocket costs for operation and maintenance will be P80,000 per
year. Taxes and insurance will be 3% of the first cost per year. Atty Gacayan expects
capital to earn not less than 30% before income taxes. Determine if the investment is good
and Calculate the following:
a. Calculate using Rate of Return Method.

b. Payback period of the investment.

c. Present worth of the net cash flow.