Zeda Enterprises has the option to invest in machinery in projects A and B but finance is only available to invest in one of them. You are given the following projected data: Initial cost Scrap value Depreciation per year Net profit Year 1 Year 2 Year 3 Year 4 Year 5 Net cash flows Year 1 Project A R300 000 R40 000 R52 000 R20 000 R30 000 R50 000 R50 000 R10 000 Project B R300 000 0 R60 000 R90 000
Zeda Enterprises has the option to invest in machinery in projects A and B but finance is only available to invest in one of them. You are given the following projected data: Initial cost Scrap value Depreciation per year Net profit Year 1 Year 2 Year 3 Year 4 Year 5 Net cash flows Year 1 Project A R300 000 R40 000 R52 000 R20 000 R30 000 R50 000 R50 000 R10 000 Project B R300 000 0 R60 000 R90 000
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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Use the information provided below to calculate the following. Where applicable, use the present value tables provided in APPENDICES
1. Calculate the
Use your answers to recommend the project that should be chosen. Motivate
your choice.
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