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year Net cash flows Net profit 1 20000 2500 2 17500 3500 3 15000 4500 4 12500 5500 5 10000 6500       The cost of capital is 12%. Required: Calculate the following: 1. Payback Period  2. Net Present value  3. Accounting rate of return

year Net cash flows Net profit 1 20000 2500 2 17500 3500 3 15000 4500 4 12500 5500 5 10000 6500       The cost of capital is 12%. Required: Calculate the following: 1. Payback Period  2. Net Present value  3. Accounting rate of return

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 2PA: Jasmine Manufacturing is considering a project that will require an initial investment of $52,000...
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Sunshine Corporation is reviewing an investment proposal. The initial cost of the investment is R52 500. The estimated cash flows and net profit for each year are presented in the schedule below. All cash flows are assumed to take place at the end of the year.

 

year Net cash flows Net profit
1 20000 2500
2 17500 3500
3 15000 4500
4 12500 5500
5 10000

6500
     

The cost of capital is 12%.

Required:
Calculate the following:
1. Payback Period 
2. Net Present value 
3. Accounting rate of return

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