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
Related questions
Question
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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa18dcc07-47e9-4325-a364-c31622e9eeb6%2Fcc5bd265-a7ba-4298-9ae6-b1825ede3e6e%2Fxv0ax8_processed.png&w=3840&q=75)
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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