The following data relate to two investment projects, only one of which may be selected: Initial capital expenditure Profit per year Year 1 Year 2 Year 3 Year 4 Expected resale value at end of year 4 Note: Project Luthuli R'000 Project Madiba R'000 45 000 45 000 22 500 9 000 18 000 9000 13 500 21 500 9 000 23 500 9 000 0 Note: Profit is calculated after deducting straight-line depreciation The cost of capital is 15% - Profit is calculated after deducting straight-line depreciation -The cost of capital is 15%
The following data relate to two investment projects, only one of which may be selected: Initial capital expenditure Profit per year Year 1 Year 2 Year 3 Year 4 Expected resale value at end of year 4 Note: Project Luthuli R'000 Project Madiba R'000 45 000 45 000 22 500 9 000 18 000 9000 13 500 21 500 9 000 23 500 9 000 0 Note: Profit is calculated after deducting straight-line depreciation The cost of capital is 15% - Profit is calculated after deducting straight-line depreciation -The cost of capital is 15%
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter12: Capital Investment Analysis
Section: Chapter Questions
Problem 16E
Related questions
Question
3.1 Calculate the payback period for both projects each (year, month and days)
3.2 Calculate the accounting
3.3 Use the
3.4 Briefly discuss the merits of using the NPV method
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