A pharmaceutical company developed four investment plans. The initial investment and the corresponding annual cash flows of the four investment plans for consecutive 5 years are shown in the following Table Q1. Project Name I II III IV Initial Investment (OMR) 4400062000100000109000Annual Cash inflow (OMR) 1000022000 27000 44000Identify the best project and decide the ranking based on the following profitability methods. a) Average rate of return. b) Payback period. c) Net Present value with discounting rate at 8% d) Benefit to cost ratio with discounting rate at 11% e) Internal rate of return for range of suitable discounting rate please solve d and e or all

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Answered: ) Average rate of return. b) Payback…

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 pharmaceutical company developed four investment plans. The initial investment and the corresponding annual cash flows of the four investment plans for consecutive 5 years are shown in the following Table Q1.

Project Name	I	II	III	IV
Initial Investment (OMR)	44000	62000	100000	109000
Annual Cash inflow (OMR)	10000	22000	27000	44000

Identify the best project and decide the ranking based on the following profitability methods.

a) Average rate of return.

b) Payback period.

c) Net Present value with discounting rate at 8%

d) Benefit to cost ratio with discounting rate at 11%

e) Internal rate of return for range of suitable discounting rate

please solve d and e or all

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