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A company is considering investment of k1,000,000 in a project. The  following are the forecasts, after depreciation and tax.                      Year                      1            Cash Inflows Discount Present Value         Factor at 10%                      1               10,000                 0.9091                      2               40,000                 0.8265                      3               60,000                 0.7513                      4               20,000                 0.6830                      5                    -                 0.6209   Compute: Payback period                                                    Discounted payback                                                        Net present value In all instances comment on the Decision criteria

A company is considering investment of k1,000,000 in a project. The  following are the forecasts, after depreciation and tax.                      Year                      1            Cash Inflows Discount Present Value         Factor at 10%                      1               10,000                 0.9091                      2               40,000                 0.8265                      3               60,000                 0.7513                      4               20,000                 0.6830                      5                    -                 0.6209   Compute: Payback period                                                    Discounted payback                                                        Net present value In all instances comment on the Decision criteria

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A company is considering investment of k1,000,000 in a project. The  following are the forecasts, after depreciation and tax.

 

                   Year

                     1

           Cash Inflows

Discount Present Value

        Factor at 10%

                     1

              10,000

                0.9091

                     2

              40,000

                0.8265

                     3

              60,000

                0.7513

                     4

              20,000

                0.6830

                     5

                   -

                0.6209

 

Compute:

  1. Payback period                                                   
  2. Discounted payback                                                       
  3. Net present value
  4. In all instances comment on the Decision criteria 
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