Solve this. Management Accounting В.Graphic Art Sdn Bhd is a printing company specializing in printing brochures andspecialist design work. In order to increase the efficiency of the business operation, themanager of the company is considering replacing the current equipment and investingin new state of the art technology. The manager has proposed two alternatives:Japan-TechKorean-TechRMRMCost280,000100,000Life of equipmentResidual valueAnnual cash inflows5 years40,00080,0005 yearsNil28,000As funds are limited, only one alternative can be chosen. The company's cost of capitalis at 11% and the relevant discount rates are as follows:Year 1Year 2 | Year 3 Year 40.731Year 50.593PVIF0.9010.8120.659Required:a.Calculate the payback period of investment for both projects.b.Calculate the net present value of investment for both projects.Advise the managing director on which project to be chosen as a good investmentdecision by stating your reason.с.

The following calculations are done for Graphic Art Sdn Bhd.

Graphic Art Sdn Bhd is a printing company specializing in printing brochures and specialist design work. In order to increase the efficiency of the business operation, the manager of the company is considering replacing the current equipment and investing in new state of the art technology. The manager has proposed two alternatives: В. Japan-Tech Korean-Tech RM RM Cost 280,000 100,000 Life of equipment 5 years 5 years Residual value 40,000 Nil Annual cash inflows 80,000 28,000 As funds are limited, only one alternative can be chosen. The company's cost of capital is at 11% and the relevant discount rates are as follows: Year 1| Year 2 | Year 3 Year 4 Year 5 PVIF 0.901 0.812 0.731 0.659 0.593 Required: а. Calculate the payback period of investment for both projects. b. Calculate the net present value of investment for both projects. Advise the managing director on which project to be chosen as a good investment decision by stating your reason. с. B.

Graphic Art Sdn Bhd is a printing company specializing in printing brochures and specialist design work. In order to increase the efficiency of the business operation, the manager of the company is considering replacing the current equipment and investing in new state of the art technology. The manager has proposed two alternatives: В. Japan-Tech Korean-Tech RM RM Cost 280,000 100,000 Life of equipment 5 years 5 years Residual value 40,000 Nil Annual cash inflows 80,000 28,000 As funds are limited, only one alternative can be chosen. The company's cost of capital is at 11% and the relevant discount rates are as follows: Year 1| Year 2 | Year 3 Year 4 Year 5 PVIF 0.901 0.812 0.731 0.659 0.593 Required: а. Calculate the payback period of investment for both projects. b. Calculate the net present value of investment for both projects. Advise the managing director on which project to be chosen as a good investment decision by stating your reason. с. B.

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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