3.1 REQUIRED Calculate the following for both projects from the information provided below: 3.1.1 Payback Period (expressed in years, months and days) 3.1.2 Accounting Rate of Return on average investment (expressed to two decimal places).

Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 12E: Refer to Exercise 19.11. 1. Compute the payback period for each project. Assume that the manager of...
icon
Related questions
Question
QUESTION 3
Answer the questions from the information provided. Where applicable, use the present value tables that
appear in the module guide.
3.1
REQUIRED
Calculate the following for both projects from the information provided below:
3.1.1 Payback Period (expressed in years, months and days)
3.1.2 Accounting Rate of Return on average investment (expressed to two decimal places).
INFORMATION
Mentos Ltd had to choose between two projects, Alpha and Beta, for which the following profits and net cash
inflows are forecast:
Year
1
2
3
4
Net profit per year
Alpha
R53 000
R53 000
R53 000
R53 000
Beta
R45 000
R65 000
R85 000
R95 000
Net cash inflow per year
Beta
Alpha
R128 000
R128 000
R128 000
R128 000
Each project requires an investment of R300 000. Both projects have no salvage value.
R120 000
R140 000
R160 000
R170 000
Transcribed Image Text:QUESTION 3 Answer the questions from the information provided. Where applicable, use the present value tables that appear in the module guide. 3.1 REQUIRED Calculate the following for both projects from the information provided below: 3.1.1 Payback Period (expressed in years, months and days) 3.1.2 Accounting Rate of Return on average investment (expressed to two decimal places). INFORMATION Mentos Ltd had to choose between two projects, Alpha and Beta, for which the following profits and net cash inflows are forecast: Year 1 2 3 4 Net profit per year Alpha R53 000 R53 000 R53 000 R53 000 Beta R45 000 R65 000 R85 000 R95 000 Net cash inflow per year Beta Alpha R128 000 R128 000 R128 000 R128 000 Each project requires an investment of R300 000. Both projects have no salvage value. R120 000 R140 000 R160 000 R170 000
Expert Solution
steps

Step by step

Solved in 3 steps with 6 images

Blurred answer
Knowledge Booster
Techniques of Time Value Of Money
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser…
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning