The following data is relating to two projects out of which only one project can be...
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The following data is relating to two projects out of which only one project can be undertaken. Description Initial Investment Year 1 Profit Year 2 profit Year 3 profit Year 4 profit Estimated resale value at the end of the year 4 Project A 50,000 30,000 22,000 10,000 11,000 10,000 Following additional information is also available to you. Project B 50,000 10,000 10,000 36,000 35,000 10,000 Profit of each year has been calculated after deducting the depreciation under the straight line basis. The cost of capital is 10% You are required to; i) Calculate payback period and Net Present Value (NPV) for each project. ii) State which project do you recommend to undertake after assessing under above two methods The following data is relating to two projects out of which only one project can be undertaken. Description Initial Investment Year 1 Profit Year 2 profit Year 3 profit Year 4 profit Estimated resale value at the end of the year 4 Project A 50,000 30,000 22,000 10,000 11,000 10,000 Following additional information is also available to you. Project B 50,000 10,000 10,000 36,000 35,000 10,000 Profit of each year has been calculated after deducting the depreciation under the straight line basis. The cost of capital is 10% You are required to; i) Calculate payback period and Net Present Value (NPV) for each project. ii) State which project do you recommend to undertake after assessing under above two methods
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Solution To calculate the payback period and net present value NPV for each project well use the following information Project A Initial Investment 50... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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