What is the payback period for the PHD and short courses programme? SCIS is evaluating two programmes. Both programmes will require an initial investment ofGH 1,300,000. Funds available to SCIS can support only one of the two programmes. Theexpected cash flows of the two programmes are as follows:PeriodPHDSHORT COURSES(GH)(GHC)1176,000528,0002308,000528,0003330,000250,0004532,400242,000750,200132,0006363,000132,000266,200462,0009The required rate of return/opportunity cost of capital of SCIS is 20 per cent.-5

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Description: What is the payback period for the PHD and short courses programme? SCIS is evaluating two programmes. Both programmes will require an initial investment ofGH 1,300,000. Funds available to SCIS can support only one of the two programmes. Theexpected

The term payback period refers to the time it takes to recover the cost of an investment. Simply…

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CIS is evaluating two programmes. Both programmes will require an initial invest GH1,300,000. Funds available to SCIS can support only one of the two programmes. The xpected cash flows of the two programmes are as follows: Period PHD SHORT COURSES (GHC) (GHC) 1 176,000 528,000 308,000 528,000 330,000 250,000 532,400 242,000 750,200 132,000 363,000 132,000 266.200 167.000 2 3 4 6. 7

CIS is evaluating two programmes. Both programmes will require an initial invest GH1,300,000. Funds available to SCIS can support only one of the two programmes. The xpected cash flows of the two programmes are as follows: Period PHD SHORT COURSES (GHC) (GHC) 1 176,000 528,000 308,000 528,000 330,000 250,000 532,400 242,000 750,200 132,000 363,000 132,000 266.200 167.000 2 3 4 6. 7

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 6PB: There are two projects under consideration by the Rainbow factory. Each of the projects will require...

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Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7,400 per year for 5 years. Calculate the two projects’ NPVs, IRRs, MIRRs, and PIs, assuming a cost of capital of 12%. Which project would be selected, assuming they are mutually exclusive, using each ranking method? Which should actually be selected?
Clearcast Communications Inc. is considering allocating a limited amount of capital investment funds among four proposals. The amount of proposed investment, estimated operating income, and net cash flow for each proposal are as follows: The companys capital rationing policy requires a maximum cash payback period of three years. In addition, a minimum average rate of return of 12% is required on all projects. If the preceding standards are met, the net present value method and present value indexes are used to rank the remaining proposals. Instructions 1. Compute the cash payback period for each of the four proposals. 2. Giving effect to straight-line depreciation on the investments and assuming no estimated residual value, compute the average rate of return for each of the four proposals. Round to one decimal place. 3. Using the following format, summarize the results of your computations in parts (1) and (2). By placing the computed amounts in the first two columns on the left and by placing a check mark in the appropriate column to the right, indicate which proposals should be accepted for further analysis and which should be rejected. 4. For the proposals accepted for further analysis in part (3), compute the net present value. Use a rate of 12% and the present value table appearing in Exhibit 2 of this chapter. 5. Compute the present value index for each of the proposals in part (4). Round to two decimal places. 6. Rank the proposals from most attractive to least attractive, based on the present values of net cash flows computed in part (4). 7. Rank the proposals from most attractive to least attractive, based on the present value indexes computed in part (5). 8. Based on the analyses, comment on the relative attractiveness of the proposals ranked in parts (6) and (7).
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There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $35,000 and is expected to generate the following cash flows: If the discount rate is 12%, compute the NPV of each project.
There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment or $28.000 and is expected to generate the following cash flows: If the discount rate is 5% compute the NPV of each project and make a recommendation of the project to be chosen.
The management of Ryland International Is considering Investing in a new facility and the following cash flows are expected to result from the investment: A. What Is the payback period of this uneven cash flow? B. Does your answer change if year 6s cash inflow changes to $920,000?
Staten Corporation is considering two mutually exclusive projects. Both require an initial outlay of 150,000 and will operate for five years. The cash flows associated with these projects are as follows: Statens required rate of return is 10%. Using the net present value method and the present value table provided in Appendix A, which of the following actions would you recommend to Staten? a. Accept Project X and reject Project Y. b. Accept Project Y and reject Project X. c. Accept Projects X and Y. d. Reject Projects X and Y.
The UMCCED Technology is considering two genetic research projects. The required rate of return on these projects is 11%. The two projects provide the following set of after-tax net cash flows. Project AKU Project ENGKAU Initial outlay -RM50,000 -RM50,000 Inflow year 1 RM10,000 RM16,000 Inflow year 2 RM18,000 RM16,000 Inflow year 3 RM15,000 RM16,000 Inflow year 4 RM16,000 RM16,000 Inflow year 5 RM13,000 RM16,000 (a) Determine the payback period for each project. If the institute imposes a 3.5-year maximum acceptable payback period, which of these projects should be accepted? (b) Calculate the net present value (NPV) for each project. (c)Calculate profitability index (PI) for each project. (d)Calculate the internal rate of return (IRR) for project ENGKAU. (e)Based on the IRR given and your answers in part (b) and (c) above, explain…
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Kayeu Ltd is evaluating the investment in two new projects X and Y which would generate the following expected net cashflows Project X Project Y Year 1 320 000 190 000 Year 2 300 000 280 000 Year 3 280 000 290 000 Year 4 240 000 300 000 Year 5 200 000 320 000 Details of the initial investment for the two projects X and Y are; $950 000 and $1 250 000 with life of 5 years Residual value for Project X is $150 000 and for Project Y is $250 000 The company has a cost of capital of 12% per annum. Discount factors Year 1 0.893 Year 2 0.797 Year 3 0.712 Year 4 0.636 Year 5 0.566 Required: (a) Assume that each project will sell for its residual value at the end of five years evaluate each project using each of the following methods: (i) Payback (ii) Accounting rate of return (iii) Net present value (b) Explain what is meant by internal rate of return
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