iThemba Ltd is considering undertaking a five years project, which will involve an initial outlay of...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
iThemba Ltd is considering undertaking a five years project, which will involve an initial outlay of R500,000. The project has the following cash flows associated with it: End year 1 2 3 4 5 cash inflow 300,000 400,000 100,000 50,000 45,000 cash outflow 90,000 100,000 175,000 35,000 20,000 a) What is the payback period for this project? b) If a rate of 20% is considered; what is the net present value (NPV) & the profitability index PI of the project? b) Is the project worthwhile for selection? Explain. iThemba Ltd is considering undertaking a five years project, which will involve an initial outlay of R500,000. The project has the following cash flows associated with it: End year 1 2 3 4 5 cash inflow 300,000 400,000 100,000 50,000 45,000 cash outflow 90,000 100,000 175,000 35,000 20,000 a) What is the payback period for this project? b) If a rate of 20% is considered; what is the net present value (NPV) & the profitability index PI of the project? b) Is the project worthwhile for selection? Explain.
Expert Answer:
Answer rating: 100% (QA)
Lets calculate the payback period net present value NPV profitability index PI and determine whether the project is worthwhile for selection based on ... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
SerivceNow question Key Performance Indicators (KPIs) are the critical (hence the word key) indicators or metrics of progress toward an intended result. KPIs provide targets for teams to shoot for,...
-
The net present value and internal rate of return desirability measures for two mutually exclusive investments being considered by Stockton Corporation to follow. Year NPV IRR R 161 14.60% S 138...
-
Given the following cash flows for a capital project in Mango Cloths, calculate its payback period and discounted payback period. The required rate of return is 8%. Year 0 1 2 3 4 5 Cash Flow-50,000...
-
On January 1, 2020, Dole, Inc., declared a 15% stock dividend on its common stock when the market value of the common stock was $20 per share. The date of record is January 30, 2020, and the...
-
Making use of the formula of the foregoing problem, estimate the time during which an electron moving in a hydrogen atom along a circular orbit of radius r = 50 pm would have fallen onto the nucleus....
-
11. How many DSC resource types are defined in this script and name them. 12. What is the PS cmdlet to get the DSC configuration? 13. After creating the MOF configuration file for a node what cmdlet...
-
In stepwise regression, we specify that \(F_{\mathrm{IN}} \geq F_{\mathrm{OUT}}\left( ight.\) or \(t_{\mathrm{IN}} \geq t_{\mathrm{OUT}}\) ). Justify this choice of cutoff values.
-
Provide one caveat that will affect whether a production-volume variance is a good measure of the economic cost of unused capacity.
-
A company sets an auction for N objects. Bidders place their bids for some subsets of the N objects that they like. The auction house has received n bids, namely bids bj for subset Sj, for j =...
-
Newlyweds Jamie Lee and Ross have had several milestones in the past year. They are newly married, recently purchased their first home, and now have twins on the way! Jamie Lee and Ross have to...
-
Discuss the criteria to be assessed when selecting a potential target market for export?
-
Can knowing the source of information that you find online unfairly bias you against the information? Explain your answer.
-
What is visual literacy?
-
Read the following rsum information and then (1) analyze the strengths or weaknesses of the information and (2) revise the rsum so that it follows the guidelines presented in this chapter. William...
-
According to the World Cancer Research Fund (www.wcrf.org), in 2018 the age-standardized rate for all cancers was 197.9 per 100,000 people. Australia has the dubious honor of having the highest...
-
Your task is to deliver a fiveminute presentation, without visuals, to your class, with the aim of persuading them to donate 1 (or its equivalent value in your currency) to the charity of your...
-
An expanded income statement for a corporation with discontinued operations includes information on 00000 Oa Ob C d e Earnings per share All of these Continuing operations Discontinued operations Net...
-
Research an article from an online source, such as The Economist, Wall Street Journal, Journal of Economic Perspectives, American Journal of Agricultural Economics, or another academic journal. The...
-
In Exercises 4956, identify each equation without completing the square. 9x 2 + 25y 2 - 54x - 200y + 256 = 0
-
In Exercises 3358, add or subtract as indicated. 3x x + 3x - 10 2 2x x2 + x - 6
-
In Exercises 3546, determine the constant that should be added to the binomial so that it becomes a perfect square trinomial. Then write and factor the trinomial. x6 - 2x
-
According to the pecking order theory: A. new debt is preferable to new equity. B. new debt is preferable to internally generated funds. C. new equity is always preferable to other sources of capital.
-
According to the static trade-off theory: A. debt should be used only as a last resort. B. companies have an optimal level of debt. C. the capital structure decision is irrelevant.
-
All else equal, the use of long-maturity debt is expected to be greater in those markets in which: A. inflation is low. B. capital markets are passive and illiquid. C. the legal systems protection of...
Study smarter with the SolutionInn App