Smart Bumpkins wants to increase its production by adding new equipment. They can choose one of two
Question:
Smart Bumpkins wants to increase its production by adding new equipment. They can choose one of two production line upgrades and must select the better alternative. They will be using the RADR to account for the risk of the project. The cost of the upgrade is $190,000 and expected cash flows from the new upgrade are expected to be as follows over the next 6 years.
Plan A. Plan B
45,000 35,000
45,000 35,000
75,000 140,000
110,000 120,000
110,000 110,000
110,000
What would be the NPV of each project and which is the best acceptable project.
What is the ANPV of each project and which is the best acceptable?
What is the IRR of each project and which is best acceptable?
Management Accounting
ISBN: 9780730369387
4th Edition
Authors: Leslie G. Eldenburg, Albie Brooks, Judy Oliver, Gillian Vesty, Rodney Dormer, Vijaya Murthy, Nick Pawsey