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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
- please give me true answerarrow_forwardSharon Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Carla Vista Company's six divisions. Sharon made the following presentation to Carla Vista's board of directors and suggested the Percy Division be eliminated. "If the Percy Division is eliminated," she said, "our total profits would increase by $25,300." The Other Five Divisions Percy Division Total Sales $1,663,000 $100,900 $1,763,900 Cost of goods sold 978,400 76,500 1,054,900 Gross profit 684,600 24,400 709,000 Operating expenses 528,500 49,700 578,200 Net income $156,100 $(25,300 ) $130,800 In the Percy Division, cost of goods sold is $60,100 variable and $16,400 fixed, and operating expenses are $29,100 variable and $20,600 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued. Is Sharon right about eliminating the Percy Division? Prepare a schedule to support your answer. (Enter negative amounts using either a negative sign preceding…arrow_forwardhello tutor please help mearrow_forward
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