Your company has a Cost of Capital of 10%. You are presented with the results of a
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Your company has a Cost of Capital of 10%. You are presented with the results of a CapitalInvestment Appraisal of FOUR different projects (see below). Which project should be accepted?
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Payback Period (PP) Accounting Rate of Return (ARR) Net Value (NPV) Internal Rate 11% Present £60,000 of Return (IRR) Project Alpha Project Beta 2 years 3 years 12% A) Project Alpha B) Project Beta C) Project Gamma D) Project Delta 11% £20,000 10% Project Gamma 4 years 11% £10,000 8% Project Delta 2.5 years 13% (£20,000) 14% 15. What is the reasoning behind charging depreciation in financial accounting? A) To ensure funds are available for the eventual replacement of the asset. B) To comply with the consistency concept. C) To ensure that the asset is included in the Statement of Financial Position (Balance Sheet) at the lower of cost and net realisable value. D) To match the cost of the non-current assets to the revenue that the asset generates Payback Period (PP) Accounting Rate of Return (ARR) Net Value (NPV) Internal Rate 11% Present £60,000 of Return (IRR) Project Alpha Project Beta 2 years 3 years 12% A) Project Alpha B) Project Beta C) Project Gamma D) Project Delta 11% £20,000 10% Project Gamma 4 years 11% £10,000 8% Project Delta 2.5 years 13% (£20,000) 14% 15. What is the reasoning behind charging depreciation in financial accounting? A) To ensure funds are available for the eventual replacement of the asset. B) To comply with the consistency concept. C) To ensure that the asset is included in the Statement of Financial Position (Balance Sheet) at the lower of cost and net realisable value. D) To match the cost of the non-current assets to the revenue that the asset generates
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1While evaluating capital investment proposalNPV and IRR are mostly usedNPV greater than 1 represent ... View the full answer
Related Book For
Auditing a business risk appraoch
ISBN: 978-0324375589
6th Edition
Authors: larry e. rittenberg, bradley j. schwieger, karla m. johnston
Posted Date:
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