The Burren Inc. is considering investing in projects 1 and 2. The initial cost of project...

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The Burren Inc. is considering investing in projects 1 and 2. The initial cost of project 1 is €3,000 and £2,000 for project 2. Each project lasts four years. Straight-line depreciation method is used. The minimum accounting rate of return is 10%. The discount rate is 10% for both projects, and the depreciation rate is 25% for each project. The minimum acceptable payback is 3 years. NWC is net working capital. Earnings Change in NWC Cash flows a) b) c) d) c) 0 0 0 (3,000) Project 1 Time (in years) 2 1 390 330 (400) 200 Table 4 3 420 100 4 450 100 0 0 0 (2,000) Project 2 Time (in years) 1 120 (25) 2 120 15 3 120 0 4 120 10 Consider Table 4. Calculate the cash flows for project 1 and project 2, respectively. Detail all calculations that you use. Consider Table 4. Calculate the net present value for project 1 and 2, respectively. Rank the projects. Detail all calculations that you use. Consider Table 4. Calculate the accounting rate of return for project 1 and 2, respectively. Rank the projects. Detail all calculations that you use. Consider Table 4. Approximate the internal rate for return for project 1 and 2, respectively. Rank the projects. Detail all calculations that you use. Consider Table 4. Further, assume that the projects are independent and your total budget is €5,000. Which project(s) would you invest in and why? Explain your answer. The Burren Inc. is considering investing in projects 1 and 2. The initial cost of project 1 is €3,000 and £2,000 for project 2. Each project lasts four years. Straight-line depreciation method is used. The minimum accounting rate of return is 10%. The discount rate is 10% for both projects, and the depreciation rate is 25% for each project. The minimum acceptable payback is 3 years. NWC is net working capital. Earnings Change in NWC Cash flows a) b) c) d) c) 0 0 0 (3,000) Project 1 Time (in years) 2 1 390 330 (400) 200 Table 4 3 420 100 4 450 100 0 0 0 (2,000) Project 2 Time (in years) 1 120 (25) 2 120 15 3 120 0 4 120 10 Consider Table 4. Calculate the cash flows for project 1 and project 2, respectively. Detail all calculations that you use. Consider Table 4. Calculate the net present value for project 1 and 2, respectively. Rank the projects. Detail all calculations that you use. Consider Table 4. Calculate the accounting rate of return for project 1 and 2, respectively. Rank the projects. Detail all calculations that you use. Consider Table 4. Approximate the internal rate for return for project 1 and 2, respectively. Rank the projects. Detail all calculations that you use. Consider Table 4. Further, assume that the projects are independent and your total budget is €5,000. Which project(s) would you invest in and why? Explain your answer.

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a To calculate the cash flows for project 1 and project 2 we need to consider the earnings changes in net working capital NWC and the initial costs Fo... View the full answer