Use the information provided below to calculate the following. Note: Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after QUESTION 5. 5.1 Payback Period of both projects (expressed in years, months and days). 5.2 Accounting Rate of Return (on average investment) of Project X (expressed to two decimal places). 5.3 Net Present Value of each project, INFORMATION The following information relates to two capital investment projects viz, Project X and Project Y that are under consideration by Asic Limited:

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 3PB: Net present value method, present value index, and analysis for a service company First United Bank...
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Use the information provided below to calculate the following. Note: Where applicable, use the
present value tables provided in APPENDICES 1 and 2 that appear after QUESTION 5.
5.1
Payback Period of both projects (expressed in years, months and days).
5.2
Accounting Rate of Returm (on average investment) of Project X (expressed to two decimal places).
5.3
Net Present Value of each project.
INFORMATION
The following information relates to two capital investment projects viz. Project X and Project Y that are under
consideration by Asic Limited:
The initial investment in each project is R400 000, with a useful life of four years. The estimated cost of capital is
16%. No scrap values are anticipated for the projects, The straight-line method of depreciation is used.
The estimated net profits of Project X over its useful life are as follows:
Year 1
R70 000
Year 2
R50 000
Year 3
R100 000
Year 4
R30 000
Project Y is expected to generate net cash flows of R140 000 per year over the four-year period.
Transcribed Image Text:Use the information provided below to calculate the following. Note: Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after QUESTION 5. 5.1 Payback Period of both projects (expressed in years, months and days). 5.2 Accounting Rate of Returm (on average investment) of Project X (expressed to two decimal places). 5.3 Net Present Value of each project. INFORMATION The following information relates to two capital investment projects viz. Project X and Project Y that are under consideration by Asic Limited: The initial investment in each project is R400 000, with a useful life of four years. The estimated cost of capital is 16%. No scrap values are anticipated for the projects, The straight-line method of depreciation is used. The estimated net profits of Project X over its useful life are as follows: Year 1 R70 000 Year 2 R50 000 Year 3 R100 000 Year 4 R30 000 Project Y is expected to generate net cash flows of R140 000 per year over the four-year period.
APPENDIX 1: PRESENT VALUE OF R1
Nunter
* 1s s 125 19% 14 19% es
2%
Pariods
naa nanra ace uoe ero ara ara a a cara aa e e aas ane aoe
2
paza nasse 09 ses sco s sama a o ae am a s sm
tarea e s as4 asara asan asoe sen s as ass aso a s n as ase
10
A z 0S a as s1 aem s s am as a a oae as ae aes ases a
14
15
17
40
ea a a na a n ta a e an an
Transcribed Image Text:APPENDIX 1: PRESENT VALUE OF R1 Nunter * 1s s 125 19% 14 19% es 2% Pariods naa nanra ace uoe ero ara ara a a cara aa e e aas ane aoe 2 paza nasse 09 ses sco s sama a o ae am a s sm tarea e s as4 asara asan asoe sen s as ass aso a s n as ase 10 A z 0S a as s1 aem s s am as a a oae as ae aes ases a 14 15 17 40 ea a a na a n ta a e an an
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