Mr Andrian is the CEO of Cleopetra Sdn Bhd ( CSB ) , a company that manufactures
Fantastic news! We've Found the answer you've been seeking!
Question:
Mr Andrian is the CEO of Cleopetra Sdn Bhd CSB a company that manufactures cosmetic product lines. Last month, Mr Andrian met with an old friend, who is a plastic surgeon. They discussed the possibility of manufacturing and selling new face cream, which could slow down the ageing process of the skin. Back in his office, Mr Andrian started to make his plan.
The project will require an initial investment of RM which includes equipment that has an expected useful life of years, and salvage value of RM Mr Andrian expects that there will be an additional cost of RM per year, and of cost of capital.
Mr Andrian estimates that CSBs cash flow will increase as follows:
Year RM
REQUIRED:
fCalculate the payback period of the new project.
Marks
gCalculate the accounting rate of return ARR of the new project.
Marks
hDetermine the net present value NPV of the new project.
Marks
iDetermine the internal rate of return IRR for the new project. Use and as discount factors.
Marks
jAdvice Mr Andrian if CSB should proceed with the plan. Provide THREE justifications.
Related Book For
Fundamental Financial Accounting Concepts
ISBN: 978-0078025907
9th edition
Authors: Thomas Edmonds, Christopher Edmonds
Posted Date: