INFORMATION
The management of SARB Limited must choose between two projects to expand their business operations. The two
projects are called Project FIC and Project PA. Each project requires an initial investment of R250 000. No scrap values are expected.
You have been presented with the following information:
PROJECT FIC
Project FIC has net
PROJECT PA
Project PA is a five-year project with annual profit of R8000, R18000, R12000, R20000 and R7000 for years one to five
respectively.
The required
REQUIRED
Use the information provided above to calculate the following:
1.
Information Provided:
- Required rate = 15%
- Year 1 Profit = 8000
- Year 2 Profit = 18,000
- Year 3 Profit = 12,000
- Year 4 Profit = 20,000
- Year 5 Profit = 7,000
- Initial Investment = 250,000
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