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calculate internal rate of return acounting rate of return pay back period

calculate internal rate of return acounting rate of return pay back period

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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calculate internal rate of return

acounting rate of return

pay back period

Further information: Ideally the company would like a 15% return on this investment. The following are the present value information: Present value 15% 10% 20% Year 1 0.833 0.694 0.579 0.909 Year 2 Year 3 Year 4 Year 5 0.870 0.756 0.658 0.572 0.826 0.751 0.482 0.683 0.621 0.497 0.402 Required: Calculate the net present value. internal rate of return, accounting rate of return and payback period, net present value of the planned investment project. a.
Transcribed Image Text:Further information: Ideally the company would like a 15% return on this investment. The following are the present value information: Present value 15% 10% 20% Year 1 0.833 0.694 0.579 0.909 Year 2 Year 3 Year 4 Year 5 0.870 0.756 0.658 0.572 0.826 0.751 0.482 0.683 0.621 0.497 0.402 Required: Calculate the net present value. internal rate of return, accounting rate of return and payback period, net present value of the planned investment project. a.
SV Sdn Bhd is considering to buy a giant machine which is expected to increase its factory production output and profits over an expected useful life of 5 years. The initial cost of investment of this machine is RM3,500,000. The estimated annual profits for the next 5 years, are as follows Year 1 Year 2 RM 200,000 400,000 Year 3 Year 4 700,000 550,000 300,000 Year 5 It is expected that machine will depreciate its useful lives and the company is adopting straight-line method in depreciation this machine. It is noted that the annual profits above are derived after deducting: annual depreciation, with an assumption that the residual value for the machine at the end of Year 5 shall be RM50.000. (i) (ii) annual administrative expenses of RM35,000. annual general provision for various expected write-offs. This provision was computed based on 1% of the investment value. (iii) Further information:
Transcribed Image Text:SV Sdn Bhd is considering to buy a giant machine which is expected to increase its factory production output and profits over an expected useful life of 5 years. The initial cost of investment of this machine is RM3,500,000. The estimated annual profits for the next 5 years, are as follows Year 1 Year 2 RM 200,000 400,000 Year 3 Year 4 700,000 550,000 300,000 Year 5 It is expected that machine will depreciate its useful lives and the company is adopting straight-line method in depreciation this machine. It is noted that the annual profits above are derived after deducting: annual depreciation, with an assumption that the residual value for the machine at the end of Year 5 shall be RM50.000. (i) (ii) annual administrative expenses of RM35,000. annual general provision for various expected write-offs. This provision was computed based on 1% of the investment value. (iii) Further information:
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