Marsh Limited has investigated the possibility of investing in a new machine. The following data have been

Question:

Marsh Limited has investigated the possibility of investing in a new machine. The following data have been extracted from the report relating to the project: 

Cost of machine on 1 January Year 6: £500,000.
Life: four years to 31 December Year 9.
Estimated scrap value: Nil.
Depreciation method: Straight-line.

The company’s required rate of return is 15%. 


Required:

Calculate the return the machine would make using the following investment appraisal methods:

(a) Payback
(b) Accounting rate of return
(c) Net present value
(d) Internal rate of return. 

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Accounting For Non-Accounting Students

ISBN: 9781292128979

9th Edition

Authors: John R. Dyson, Ellie Franklin

Question Posted: