Question: Future Vision Ltd is analyzing a potential investment project with these details: Initial investment of R700,000 and an expected residual value of R60,000. Year Cashflows

Future Vision Ltd is analyzing a potential investment project with these details:

  • Initial investment of R700,000 and an expected residual value of R60,000.

Year

Cashflows

Discount factor

Year 1

R120,000

0.909

Year 2

R140,000

0.826

Year 3

R150,000

0.751

Year 4

R80,000

0.683

Year 5

R50,000

0.621

The company’s cost of capital is 10%. The cash flows are after tax, with annual depreciation of R35,000. The tax rate is 26%.

Required:

  1. Calculate each of the following: 1.1 Accounting Rate of Return 1.2 Payback period 1.3 Net Present Value (NPV) 1.4 Profitability Index (PI)

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 Accounting Questions!

Q:

Hi, this assignment is Urgent! The instruction is in the attachment ?final project guidelines and rubric?. Using Home Depot Financial Report, (here?s the link)...

Q:

Please solve the following questions and give me an excellent answer. Directions: Answer the following questions on a separate document. Explain how you reached the answer or show your work if a...

Q:

QUESTION ONE [25] 1.1 The following data relate to two investment projects, only one of which may be selected: Project W Project L R R Initial capital expenditure 200 000 200 000 Net cash inflows per...

Q:

PART 3: Relevant Calculations ( Beta, Cost of Debt, Cost of Equity, WACC) Relevant Info part 3: (still applicable) Please show supporting working in an excel spreadsheet. Question: How much is the...

Q:

PART 3: Relevant Calculations ( Beta, Cost of Debt, Cost of Equity, WACC) Relevant Info part 3: (still applicable) Please show supporting working in an excel spreadsheet. Question: What are the...

Q:

25 MARKS QUESTION 1 Rother Co manufactures a single product, the Bark, details of which are as follows. Per unit Selling price Direct materials Direct labour Variable overheads R 180.00 40.00 16.00...

Q:

MANAGERIAL ACCOUNTING investment appraisal QUESTION 2 25 MARKS The directors of Ori Ltd are currently considering two mutually exclusive investment projects. Both projects are concerned with the...

Q:

Please answer me page 51 to page 56 on the attachment. is a multiple choice questions. Thank you FAC1502/101/3/2016 Tutorial letter 101/3/2016 Financial accounting concepts, principles and procedures...

Q:

could you please assist me on how to calculate (c) and (d) in terms of IAS36 (c) 13 (d) Calculate the carrying amount of each item in the passenger cash-generating unit after this cash-generating...

Q:

Question Help P26-31A (similar to) Leches Company operates a chain of sandwich shops. (Click the icon to view additional information) Read the requirements Click the icon to view Present Value of $1...

Q:

Todays spot rate of the Mexican peso is $.10. Assume that purchasing power parity holds. The U.S. inflation rate over this year is expected to be 7 percent, while the Mexican inflation over this year...

Q:

Rascal, Inc., has an issue of preferred stock outstanding that pays a $9.7 dividend every year in perpetuity. If this issue currently sells for $90.35 pershare, the required return is ___________...

Q:

y ' ' + 1 0 y ' + 2 9 y = 0 , y ( 0 ) = 1 , y ' ( 0 ) = - 7

Q:

Stevie McQueen has run Lightning Car Detailing for the past 10 years. His static budget and actual results for June 2011 are provided next. Stevie has one employee who has been with him for all 10...

Q:

Calculating Annuity Present Values Beginning three months from now, you want to be able to withdraw $1,500 each quarter from your bank account to cover college expenses over the next four, years. If...

Q:

Replace the loading system acting on the beam by an equivalent resultant force and couple moment at point O. Given: F1 = 200 N F2 = 450 N M = 200N m a = 0.2 m b = 1.5 m c = 2 m d = 1.5 m θ = 30...

Q:

Materials and manufacturing labor variances, standard costs. Dunn, Inc. is a privately held furniture manufacturer. For August 2009, Dunn had the following standards for one of its products, a wicker...

Q:

(Earnings Per Share) The stockholders equity section of Tkachuk Corporation appears below as of December 31, 2004. 8% cumulative preferred stock, $50 par value, authorized 100,000 shares, outstanding...

Q:

Create a 200 word summary on the Juvenile Justice System than and today. Describe The Juvenile system and provide a generalizable definition. Highlight the issues in the Juvenile system and why this...

Q:

Critique the following statement: Generally accepted accounting principles represent a precise and narrowly defined set of laws that are set by a council of accounting experts who insulate themselves...

Q:

Chuck Enis, a financial analyst, is studying firms in the pharmaceutical industry, hoping to find a solid investment. He is having difficulty comparing the performance levels of companies that are...

Q:

After several months of planning. Jasmine Worthy started a haircutting business called Expressions. The following events occurred during its first month of business. a. On August 1, Worthy invested...