Business, 17.08.2021 19:10 gymnast5464

Grey Ltd has provided the following figures for two investment projects, only one of which may be chosen. Initial outlay
Profit for year 1 2 3 4
Estimated resale value at end of year 4
Project X Project Y ££ 200,000 180,000
65,000 35,000 65,000 35,000 75,000 65,000 35,000 85,000
60,000 40,000
Profit is calculated after deducting straight line depreciation. The business has a cost of capital of 10%.
a) Calculate for each project
i. Payback
ii. Average Return on Capital Employed
iii. Net present value (NPV)
b) Critically discuss the merits and limitations of payback and NPV (Your answer is to be presented in an essay format NOT Bullet Points)

Answers: 1

Show answers

Another question on Business

Business, 22.06.2019 01:10

Technology corp. is considering a $238,160 investment in a new marketing campaign that it anticipates will provide annual cash flows of $52,000 for the next five years. the firm has a 6% cost of capital. what should the analysis indicate to the firm's managers?

Answers: 2

Answer

Business, 22.06.2019 10:00

Your uncle is considering investing in a new company that will produce high quality stereo speakers. the sales price would be set at 1.5 times the variable cost per unit; the variable cost per unit is estimated to be $75.00; and fixed costs are estimated at $1,200,000. what sales volume would be required to break even, i.e., to have ebit = zero?

Answers: 1

Answer

Business, 22.06.2019 11:10

The green fiddle has declared a $5 per share dividend. suppose capital gains are not taxed, but dividends are taxed at 15 percent. new irs regulations require that taxes be withheld at the time the dividend is paid. green fiddle stock sells for $71.50 per share, and the stock is about to go ex-dividend. what will the ex-dividend price be?

Answers: 2

Answer

Business, 22.06.2019 15:40

Colter steel has $5,550,000 in assets. temporary current assets $ 3,100,000 permanent current assets 1,605,000 fixed assets 845,000 total assets $ 5,550,000 assume the term structure of interest rates becomes inverted, with short-term rates going to 10 percent and long-term rates 2 percentage points lower than short-term rates. earnings before interest and taxes are $1,170,000. the tax rate is 40 percent earnings after taxes = ?

Answers: 1

Answer

You know the right answer?

Grey Ltd has provided the following figures for two investment projects, only one of which may be ch...

Questions