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2. Net present value 3. Accounting rate of return 4. Profitability index

2. Net present value 3. Accounting rate of return 4. Profitability index

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Don't Answer the Payback Period since its already been answered

YOUR UNDARSIANDING Directions: Evaluate the following projects. Which is the best among them using the different tools in capital budgeting? Use the following tools to make your Project Cash outlay A В P920,000 decisions: P1,000,000 310,000 P880,000 1. Payback period 2. Net present value 3. Accounting rate of return 4. Profitability index Net Cash inflow Year 1 200,000 290,000 Year 2 310,000 220,000 280,000 Year 3 310,000 250,000 300,000 Year 4 310,000 180,000 250,000 Year 5 310,000 90,000 295,000 Year 6 310,000 90,000 195,000 Salvage value 70,000 80,000 Discount rate 10% 8% 12% Economic life 4 years 5 years 6 years
Transcribed Image Text:YOUR UNDARSIANDING Directions: Evaluate the following projects. Which is the best among them using the different tools in capital budgeting? Use the following tools to make your Project Cash outlay A В P920,000 decisions: P1,000,000 310,000 P880,000 1. Payback period 2. Net present value 3. Accounting rate of return 4. Profitability index Net Cash inflow Year 1 200,000 290,000 Year 2 310,000 220,000 280,000 Year 3 310,000 250,000 300,000 Year 4 310,000 180,000 250,000 Year 5 310,000 90,000 295,000 Year 6 310,000 90,000 195,000 Salvage value 70,000 80,000 Discount rate 10% 8% 12% Economic life 4 years 5 years 6 years
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