Calculate Payback period, Accounting rate of return on initial investment and NPV Criteria Presented is information pertaining
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Question:
Calculate
Payback period,
Accounting rate of return on initial investment and
NPV Criteria
Transcribed Image Text:
Presented is information pertaining to the cash flows of three mutually exclusive investment proposals: Proposal X Proposal Y Proposal Z $92,000 $92,000 $92.000 Initial investment Cash flow from operations Year 1 Year 2 Year 3 Disinvestment Life (years) 90,000 2,000 47,500 0 3 years 46,000 46,000 47,500 0 3 years 92,000 0 1 year Select the best investment proposal using the payback period, the accounting rate of return on initial investment, and the net present value criteria. Assume that the organization's cost of capital is Note: Follow rounding instructions noted for each computation. Use a negative sign with your answers, when appropriate. Proposal Z Best proposal 0x Z 0 XY 0 x X Payback period (years) Accounting rate of return; Round answers to 4 decimal places. Net present value: Round answers to nearest whole number. Proposal X 0 x 0x 0x Proposal Y 0 x 0 x 0 x percent. Presented is information pertaining to the cash flows of three mutually exclusive investment proposals: Proposal X Proposal Y Proposal Z $92,000 $92,000 $92.000 Initial investment Cash flow from operations Year 1 Year 2 Year 3 Disinvestment Life (years) 90,000 2,000 47,500 0 3 years 46,000 46,000 47,500 0 3 years 92,000 0 1 year Select the best investment proposal using the payback period, the accounting rate of return on initial investment, and the net present value criteria. Assume that the organization's cost of capital is Note: Follow rounding instructions noted for each computation. Use a negative sign with your answers, when appropriate. Proposal Z Best proposal 0x Z 0 XY 0 x X Payback period (years) Accounting rate of return; Round answers to 4 decimal places. Net present value: Round answers to nearest whole number. Proposal X 0 x 0x 0x Proposal Y 0 x 0 x 0 x percent.
Expert Answer:
Answer rating: 100% (QA)
Answer 1 Pay back period Net cash inflow Initial investment i Proposal X 90000 2000 92000 2 years ii ... View the full answer
Related Book For
Foundations of Finance The Logic and Practice of Financial Management
ISBN: 978-0132994873
8th edition
Authors: Arthur J. Keown, John D. Martin, J. William Petty
Posted Date:
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