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1.
To identify: Management tools to evaluate investments.
2.
To identify: Information needed to use the above tools.
Explanation:
Given below is the information required to use the above management tools:
Hence, information required to use the above management tools.
3.
To identify: Advantages and disadvantage of management tools listed above.
Explanation:
Given below are the advantages and disadvantages of the above management tools:
Net present value method:
Advantage:
NPV takes into consideration time value of money and helps in determining whether a particular investment will be advantageous for the A Company or not.
Disadvantage:
It is more complicated to understand and is not expressed in terms of percentage
Accounting
Advantage:
ARR assists in comparison between different alternatives and thus will help in selecting the alternative with best financial return.
Disadvantage:
The main disadvantage of this method is that it does not consider the time factor and ignores the external factor which affects the profitability of the Company.
Payback period:
Advantage:
It will help the A Company to determine how speedily it can recover its investment.
Disadvantage:
Payback period does not take into consideration time value of money.
Hence, mentioned above are the advantages and disadvantage of listed management tools.
3.
To identify: Advantages and disadvantage of management tools listed above.
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Chapter 24 Solutions
Loose-Leaf for Financial and Managerial Accounting
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