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Proposal I Automated Machine 250,000 5 years 180,000 60,000 14,000 25,000 Proposal II Ordinary Mac 80,000 7 years 150,000 40,000 70,000 30,000 Machine ed Life ed sales p.a. Material Labor Variable ads

Proposal I Automated Machine 250,000 5 years 180,000 60,000 14,000 25,000 Proposal II Ordinary Mac 80,000 7 years 150,000 40,000 70,000 30,000 Machine ed Life ed sales p.a. Material Labor Variable ads

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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Instructions: A company has iwo alternative proposuls. The details are as follows: Compare and solve the following data to determine ARR: Proposal I Automated Machine Proposal II Ordinary Machine Cost of Machine 250,000 5 years 180,000 60,000 14,000 25,000 80,000 Estimated Life Estimated sales p.a. Cost: Material Labor years 150,000 40,000 70,000 30,000 Variable Overheads Answer the following: 1. Compute the profitability of the proposals under the return on investment method. 2. Decide whether to accept the offer or not. State your reason. 3. Defend your answer.
Transcribed Image Text:Instructions: A company has iwo alternative proposuls. The details are as follows: Compare and solve the following data to determine ARR: Proposal I Automated Machine Proposal II Ordinary Machine Cost of Machine 250,000 5 years 180,000 60,000 14,000 25,000 80,000 Estimated Life Estimated sales p.a. Cost: Material Labor years 150,000 40,000 70,000 30,000 Variable Overheads Answer the following: 1. Compute the profitability of the proposals under the return on investment method. 2. Decide whether to accept the offer or not. State your reason. 3. Defend your answer.
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