Question: answer quickly for thumbs up, show all working 2. A company has three alternative investments which are being considered. Because all three investments are for

answer quickly for thumbs up, show all working
answer quickly for thumbs up, show all working 2. A company has
three alternative investments which are being considered. Because all three investments are

2. A company has three alternative investments which are being considered. Because all three investments are for the same type of unit and yield the same service, only one of the investments can be accepted. The risk factors are the same for all three cases. Company policies, based on the current economic situation, dictate that a minimum annual return (mar) on the original investment of 15 percent after taxes must be predicted for any unnecessary investment. (This may be assumed to mean that other equally sound investments yielding a 15 percent return after taxes are available.) Company policies also dictate that straight-line depreciation be used over the service life of the investment with accounting for the salvage value. For time value of money calculation, the continuous cash flow and continuous compounding relationships are to be used. Land value and pre start-up Question 2 continued costs can be ignored. Use the following data to determine the following profitability-evaluation criteria: (a) Retum on investment (b) Payback period (PBP) (7 marks) (c) Net return (d) Net present worth (5 marks) (5 marks) (8 marks) *For investat annual income or revenue minus all costs except depreciation. year 3=$36000, veariable annual cash flow to project is: year 1=$30000, year 2=$31000, Use: pP=(rer1)erj;FP=erj;AP=(rerN1)erN;r=ram=ln(1+mar) reference PBP=mar+fFCl/ClfFCI/CI

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!