Question 2 Sunshine Corporation is reviewing an investment proposal. The initial cost of the investment is R52 500. The estimated cash flows and net profit for each year are presented in the schedule below. All cash flows are assumed to take place at the end of the year. year Net cash flows Net profit R20 000 R2 500 R17 500 R3 500 R15 000 R4 500 R12 500 R5 500 R10 000 R6 500 The cost of capital is 12%. Required: Calculate the following: 1. Payback Period 2. Net Present value 3. Accounting rate of return
Question 2 Sunshine Corporation is reviewing an investment proposal. The initial cost of the investment is R52 500. The estimated cash flows and net profit for each year are presented in the schedule below. All cash flows are assumed to take place at the end of the year. year Net cash flows Net profit R20 000 R2 500 R17 500 R3 500 R15 000 R4 500 R12 500 R5 500 R10 000 R6 500 The cost of capital is 12%. Required: Calculate the following: 1. Payback Period 2. Net Present value 3. Accounting rate of return
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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Question 2
Sunshine Corporation is reviewing an investment proposal. The initial cost of the investment is
R52 500. The estimated cash flows and net profit for each year are presented in the schedule
below. All cash flows are assumed to take place at the end of the year.
| year | Net cash flows | Net profit |
| R20 000 | R2 500 | |
| R17 500 | R3 500 | |
| R15 000 | R4 500 | |
| R12 500 | R5 500 | |
| R10 000 | R6 500 |
The cost of capital is 12%.
Required:
Calculate the following:
1. Payback Period
2.
3. Accounting
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