A firm has a choice between two investment projects, all of which involve an initial outlay of GH¢36,000. The returns at the end of the next 4 years are given below. If the interest rate is 15%, say whether each project is viable or not, and which is the best investment. Year Project A Project B 1 15,000 5,000 2 15,000 10,000 3 15,000 20,000 4 15,000 25,000 All values are given in GH¢.
A firm has a choice between two investment projects, all of which involve an initial outlay of GH¢36,000. The returns at the end of the next 4 years are given below. If the interest rate is 15%, say whether each project is viable or not, and which is the best investment. Year Project A Project B 1 15,000 5,000 2 15,000 10,000 3 15,000 20,000 4 15,000 25,000 All values are given in GH¢.
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter26: Capital Investment Analysis
Section: Chapter Questions
Problem 3CMA
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a) A firm has a choice between two investment projects, all of which involve an initial outlay of GH¢36,000. The returns at the end of the next 4 years are given below. If the interest rate is 15%, say whether each project is viable or not, and which is the best investment.
Year Project A Project B
1 15,000 5,000
2 15,000 10,000
3 15,000 20,000
4 15,000 25,000
All values are given in GH¢.
b) A factory increase its production by 712% and produced 1290 tonnes. How many tonnes did she produce before?
c) If we place GH¢100 in the savings account that yields 12% compounded quarterly, what nearest GH¢ would our investment grow to at the end of 5 years?
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