In Management Accounting, there are some investment appraisal methods to analyse the performance of investment projects. The following table lists out the financial data of two projects for London Technology Ltd:Projects/MethodsABPayback Period2 year and 4 months2 year and 9 monthsAccounting Rate of Return27.6%15.44%Net Present Value£23,040£21,798 Required:Which project should company accept? In the discussion, please explain which method can lead to better decision.

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Answered: In Management Accounting, there are…

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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In Management Accounting, there are some investment appraisal methods to analyse the performance of investment projects. The following table lists out the financial data of two projects for London Technology Ltd:

Projects/Methods	A	B
Payback Period	2 year and 4 months	2 year and 9 months
Accounting Rate of Return	27.6%	15.44%
Net Present Value	£23,040	£21,798

Required:

Which project should company accept? In the discussion, please explain which method can lead to better decision.

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