QUESTION 4 REQUIRED Use the information provided below to calculate the following: 4.1 Payback Period of Project B (answer expressed in years). 4.2 Return on investment of Project A (answer expressed to two decimal places). 4.3 Net Present Value of both projects. 4.4 Internal Rate of Return of Project B (answer expressed to two decimal places). INFORMATION The following information relates to two capital expenditure projects. Because of capital rationing, only one project can be accepted. Initial cost Expected life Project A R1 000 000 5 years Project B R1 000 000 5 years Scrap value (not included in the figures below) R20 000 0. Average annual profit R92 000 R90 000 Expected net cash inflows: R End of year: 1. 240 000 290 000 260 000 290 000 3 280 000 290 000 4 360 000 290 000 5 300 000 290 000 The company estimates that its cost of capital is 12%.
QUESTION 4 REQUIRED Use the information provided below to calculate the following: 4.1 Payback Period of Project B (answer expressed in years). 4.2 Return on investment of Project A (answer expressed to two decimal places). 4.3 Net Present Value of both projects. 4.4 Internal Rate of Return of Project B (answer expressed to two decimal places). INFORMATION The following information relates to two capital expenditure projects. Because of capital rationing, only one project can be accepted. Initial cost Expected life Project A R1 000 000 5 years Project B R1 000 000 5 years Scrap value (not included in the figures below) R20 000 0. Average annual profit R92 000 R90 000 Expected net cash inflows: R End of year: 1. 240 000 290 000 260 000 290 000 3 280 000 290 000 4 360 000 290 000 5 300 000 290 000 The company estimates that its cost of capital is 12%.
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter15: Capital Investment Analysis
Section: Chapter Questions
Problem 15.3.3P
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