Information for two alternative projects involving machinery investments follows:Initial investmentProject 1$ (123,000)Project 2$ (93,000)Salvage value013,000Annual income14,14512,720a. Compute accounting rate of return for each project.b. Based on accounting rate of return, which project is preferred?Complete this question by entering your answers in the tabs below.Required A Required BCompute accounting rate of return for each project.Project 1Project 2Accounting Rate of ReturnDenominator:Numerator:1=Accounting rate of return00< Required ARequired B >

Step 1:Answer A.Computation of the accounting rate of return for each project:…

Answered: Information for two alternative…

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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Subject: accounting
find FW of Alt. A find FW of Alt. B find FW of Alt. C find FW of Alt. D
Activity Three (Accounting Rate of Return - ARR) The expected cash revenues of two investment projects (A and B) for the next three years are provided in Table 2 below. As a financial consultant, you are required to evaluate whether to invest in Project A or Project B by employing the method of ARR (assume that there are no other costs). Required Tasks: Calculate the ARR for each project. Show the ranking of the projects based on the method of ARR and use critical analysis to advise your client accordingly as to the best investment action. Discuss the main advantages (+) of the methods of ARR as well as the main drawbacks (–). Year 0 (100) (100) Year 1 40 0 Year 2 50 80 Year 3 60 70
Sd Subject: acounting
E Click the icon to view the ne More Info (a) Identity all simple investme DA. Project C B. Project B C. Project D YD. Project A Net Cash Flow Project C $50,000 Project D Project A -$32,000 35,000 25,000 Project B $38,000 $46,300 2,600 6,173 78,345 1 37,000 -26,000 -26,90 -26,006 47.000 (b) Identify all nonsimple investm 15,000 -3,000 DA. Project A VB. Project B OC. Project D OD. Project C Print Done (c) Compute /" for each investment. The rate of return of Project A is 71.1 %. (Round to one decimal place.) The rate of return of Project B is 68.1%. (Round to one decimal place.) The rate of return of Project C is 26 % (Round to one decimal place.)
Information for two alternative projects involving machinery investments follows: Project 1 Initial investment Salvage value Annual income $ (128,000) Ө Project 2 $ (98,000) 18,000 14,080 11,600 a. Compute accounting rate of return for each project. b. Based on accounting rate of return, which project is preferred? Complete this question by entering your answers in the tabs below. Required A Required B Compute accounting rate of return for each project. Project 1 Project 2 Numerator: Accounting Rate of Return Denominator: Required A Required B Based on accounting rate of return, which project is preferred? Based on accounting rate of return, is preferred. = Accounting rate of return
Subject: accounting
Attend all part
The following table contains information about four potential investment projects that Castle Corporation is considering. Payback Period Required Investment $ 900,000 $ 1,150,000 $ 1,400,000 $ 1,900,000 Project B с D Project Life 5 Required 1 ARR 39.00% 21.00% 22.50% 22.20% Complete this question by entering your answers in the tabs below. 1st preferred 2nd preferred 3rd preferred 4th preferred 3.6 4.8 4.5 2.5 Required: 1. Rank the four projects in order of preference under each method indicated by the headers: 2. Which method is the best for evaluating the investments? Profitability Index 2.19 1.98 1.61 1.56
A techniques-Decision among mutually exclusive investments Pound Industries is attempting to select the best of three mutually exclusive projects. The initial investment and after-tax cash inflows associated with these projects are shown in the following table. Cash flows Initial investment (CF) Project A $60,000 Project B $100,000 Project C $90,000 Cash inflows (CF), t=1 to 5 $20,000 $31,500 $32,000 a. Calculate the payback period for each project. b. Calculate the net present value (NPV) of each project, assuming that the firm has a cost of capital equal to 12%. c. Calculate the internal rate of return (IRR) for each project. d. Indicate which project you would recommend. a. The payback period of project A is years. (Round to two decimal places.) % [7%
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