1) ABC Ltd is considering to invest in a project the costs $7,00,000. Tax rate is 50%. Thr company uses straight line method of depreciation and tax as follows: Year Profit before depreciation and tax $ P.V factor at 10% 1 $1,20,000 0.909 2 $1,40,000 0.826 3 $2,00,000 0.751 4 $2,50,000 0.683 5 $3,00,000 0.621 Calculate the following: A) Pay back period B) Net present value at 10% C) Accounting rate of return.

1) ABC Ltd is considering to invest in a project the costs $7,00,000. Tax rate is 50%. Thr company uses straight line method of depreciation and tax as follows: Year Profit before depreciation and tax $ P.V factor at 10% 1 $1,20,000 0.909 2 $1,40,000 0.826 3 $2,00,000 0.751 4 $2,50,000 0.683 5 $3,00,000 0.621 Calculate the following: A) Pay back period B) Net present value at 10% C) Accounting rate of return.

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter10: Project Cash Flows And Risk

Section: Chapter Questions

Problem 6PROB

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