Two mutually exclusive alternatives are available. Project X will require initial investment of 50,000 and run for
Question:
Two mutually exclusive alternatives are available. Project X will require initial investment of £50,000 and run for three years at a cost of £8,000 per annum. Project Y will require initial investment of £110,000 and last for five years at a cost of £12,000 for the first two years and £2,000 in years three, four and five. Calculate the annualised cost of both projects over a five-year period, assuming that reinvestment in Project X would cost £4,000 at the end of year two and an interest rate of 6 per cent. Which alternative should be selected?
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To calculate the annualized cost of both projects over a fiveyear period well use the concept of the ...View the full answer
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Related Book For 
Frank Woods Business Accounting Volume 2
ISBN: 9780273693109
10th Edition
Authors: Frank Wood, Alan Sangster
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