Answer to Question #136114 in Finance for Michelle

Question

A company is to invest with the following information.
Investment - R280 000
Scrap value - Nil
Expected life - 5years
Cost of capital - 12%
Cash profits end year 1 - R23 000. Cash Flow - R79 000
Cash profits end year 2 - R26 000. Cash Flow - R82 000
Cash profits end year 3 - R40 000. Cash Flow - R96 000
Cash profits end year 4 - R43 000. Cash Flow - R99 000
Cash profits end year 5 - R14 000. Cash Flow - R70 000

2.1 calculate the accounting rate of return
2.2 calculate the payback period in years, months and days
2.3 if payback cut off is 3 years, should the project be chosen and why
2.4 calculate the net present value of the project
2.5 should the project be accepted on the basis of NPV and why

Answer 1

Dear Michelle, your question requires a lot of work, which neither of our experts is ready to perform for free. We advise you to convert it to a fully qualified order and we will try to help you. Please click the link below to proceed: Submit order