Zeda Enterprises has the option to invest in machinery in projects A and B but finance is only available to invest in one of them. You are given the following projected data: Initial cost Scrap value Depreciation per year Net profit Year 1 Year 2 Project A R300 000 R40 000 R52 000 R20 000 R30 000 Project B R300 000 0 R60 000

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Chapter1: Financial Statements And Business Decisions
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5.1.3 Calculate the Net Present Value of each project (with amounts rounded off to the nearest Rand).
INFORMATION
Zeda Enterprises has the option to invest in machinery in projects A and B but finance is only available to invest in
one of them. You are given the following projected data:
Initial cost
Scrap value
Depreciation per year
Net profit
Year 1
Year 2
Year 3
Year 4
Year 5
Net cash flows
Year 1
Year 2
Year 3
Year 4
Year 5
Project A
R300 000
R40 000
R52 000
R20 000
R30 000
R50 000
R60 000
R10 000
Project B
R300 000
0
R60 000
R90 000
R90 000
R90 000
R90 000
R90 000
Transcribed Image Text:5.1.3 Calculate the Net Present Value of each project (with amounts rounded off to the nearest Rand). INFORMATION Zeda Enterprises has the option to invest in machinery in projects A and B but finance is only available to invest in one of them. You are given the following projected data: Initial cost Scrap value Depreciation per year Net profit Year 1 Year 2 Year 3 Year 4 Year 5 Net cash flows Year 1 Year 2 Year 3 Year 4 Year 5 Project A R300 000 R40 000 R52 000 R20 000 R30 000 R50 000 R60 000 R10 000 Project B R300 000 0 R60 000 R90 000 R90 000 R90 000 R90 000 R90 000
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