Using the information from table 3 and Discount Cash Flow criteria,

calculate Pay Back Period (PBP), Account Rate of Return (ARR), Net Present Value (NPV) and Internal Rate Return (IRR) for project A & Project B if the industry plans to sale the unit cost of RO 350.

question is complete, some values not given, you have to found

Q3. ABC steel plant industry plans to manufacture a product. The product needs a special component. The industry has reviewed that the special component can be produced in the plant or bought in. An investment is required to start the production of the component for which two mutually exclusive projects A and B representing different production processes are available.

The altemative option is to buy in from another company representing project C. The details of projects A and B are given in Table 3:

(i) Using the information from table 3 and Discount Cash Flow criteria, calculate Pay Back Period (PBP), Account Rate of Return (ARR), Net Present Value (NPV) and

Internal Rate Return (IRR) for project A & Project B if the industry plans to sale the unit cost of RO 350.

Table 3 Description Capital (RO) Life (years) Sales Quantity (units per year) Salaries per year (RO) Other fixed costs per year (RO) Wages per year (RO) Cost of materials per year (RO) Other variable costs per year (RO) Scrap value at the end of the year (RO) Cost of capital (%) Project-A #N/A 15 10,000 45,000 40,000 70,000 #N/A 35,000 #N/A #N/A Project-B #N/A 15 12,000 50,000 85,000 80,000 #N/A 40,000 #N/A #N/A Table 3 Description Capital (RO) Life (years) Sales Quantity (units per year) Salaries per year (RO) Other fixed costs per year (RO) Wages per year (RO) Cost of materials per year (RO) Other variable costs per year (RO) Scrap value at the end of the year (RO) Cost of capital (%) Project-A #N/A 15 10,000 45,000 40,000 70,000 #N/A 35,000 #N/A #N/A Project-B #N/A 15 12,000 50,000 85,000 80,000 #N/A 40,000 #N/A #N/A