Edilia Sdn Bhd are evaluating the data for two projects as follows: Project A (RM) Project...

 

Transcribed Image Text:

Edilia Sdn Bhd are evaluating the data for two projects as follows: Project A (RM) Project B (RM) 45,000 Operating Cash Inflow Initial Investment 42,000 Year 1 14,000 2 14,000 3 14,000 4 14,000 5 14,000 28,000 12,000 10,000 10,000 10,000 For each project, calculate the following capital budgeting techniques: (a) Accounting Rate of Return (Assume salvage value = 0) (b) Payback Period (c) Net Present Value (Use cost of capital = 10 percent) (d) Profitability Index (Use the same cost of capital in (c) above) Edilia Sdn Bhd are evaluating the data for two projects as follows: Project A (RM) Project B (RM) 45,000 Operating Cash Inflow Initial Investment 42,000 Year 1 14,000 2 14,000 3 14,000 4 14,000 5 14,000 28,000 12,000 10,000 10,000 10,000 For each project, calculate the following capital budgeting techniques: (a) Accounting Rate of Return (Assume salvage value = 0) (b) Payback Period (c) Net Present Value (Use cost of capital = 10 percent) (d) Profitability Index (Use the same cost of capital in (c) above)

Answer rating: 100% (QA)

To calculate the capital budgeting techniques for projects A and B we will use the provided data Lets calculate each of the techniques a Accounting Rate of Return ARR ARR is calculated by dividing the ... View the full answer