Gordon Company is considering a three-year capital investment that will return $150,000 per year. The present value of this annuity at the company's required rate of return of 12% is $360,275. Required:Complete the table that has been started below to show the return on investment at 12% and the amount of investment recovered each year. Remember that the investment balance should be zero at the end of the three years. (Round to the nearest whole dollar.) a b c d Time PeriodInvestment Balance During the Year Annual Cash Inflow Return on Investment Recovered Investment Year-end Investment Balance1$360,275 2 3
What will be an ideal response?
| a | b | c | d | ||||||||||||||||
| Time Period | Investment Balance During the Year | Annual Cash Inflow | Return on Investment | Recovered Investment | Year-end Investment Balance | ||||||||||||||
| (a × 0.12) | (b?c) | (a?d) | |||||||||||||||||
| 1 | $ | 360,275 | $ | 150,000 | $ | 43,233 | $ | 106,767 | $ | 253,508 | |||||||||
| 2 | 253,508 | 150,000 | 30,421 | 119,579 | 133,929 | ||||||||||||||
| 3 | 133,929 | 150,000 | 16,071 | 133,929 | 0 | ||||||||||||||
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