QUESTION 3Answer the questions from the information provided. Where applicable, use the present value tables thatappear in the module guide.3.1REQUIREDCalculate the following for both projects from the information provided below:3.1.1 Payback Period (expressed in years, months and days)3.1.2 Accounting Rate of Return on average investment (expressed to two decimal places).INFORMATIONMentos Ltd had to choose between two projects, Alpha and Beta, for which the following profits and net cashinflows are forecast:Year1234Net profit per yearAlphaR53 000R53 000R53 000R53 000BetaR45 000R65 000R85 000R95 000Net cash inflow per yearBetaAlphaR128 000R128 000R128 000R128 000Each project requires an investment of R300 000. Both projects have no salvage value.R120 000R140 000R160 000R170 000

Payback period The time that a project undertakes to recover the funds invested in a project is…

3.1 REQUIRED Calculate the following for both projects from the information provided below: 3.1.1 Payback Period (expressed in years, months and days) 3.1.2 Accounting Rate of Return on average investment (expressed to two decimal places).

3.1 REQUIRED Calculate the following for both projects from the information provided below: 3.1.1 Payback Period (expressed in years, months and days) 3.1.2 Accounting Rate of Return on average investment (expressed to two decimal places).

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Please help answer From Question 3.1 to 3.5 REQUIREDStudy the information provided below and calculate the following:3.1 Payback Period of Project A (answer expressed in years, months and days). 3.2 Accounting Rate of Return (on average investment) of Project B (answer expressed totwo decimal places).3.3 Net Present Value of both projets (amounts rounded off to the nearest Rand). 3.4 Benefit Cost Ratio of Project A (answer expressed to three decimal places). 3.5 Internal Rate of Return of Project B (answer expressed to two decimal places). INFORMATIONThe following information relates to two possible capital expenditure projects being considered by EdamLtd. Because of capital rationing, only one project can be accepted.Project A Project BInitial cost R800 000 R800 000Expected useful life 5 years 5 yearsAverage annual profit R80 000 R80 000Expected net cash inflows: R RYear 1 240 000 240 000Year 2 260 000 240 000Year 3 280 000 240 000Year 4 220 000 240 000Year 5 200 000 240 000The…
Note: Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after QUESTION 5. REQUIRED Use the information given below to calculate the following: 5.1 Payback Period of both projects (expressed in years, months and days) 5.2 Net Present Value of both projects 5.3 Accounting Rate of Return (on average investment) of Project Ron (expressed to two decimal places) Internal Rate of Return (IRR) of Project Hob. Your answer must include the calculation of two net present values as well as the determination of the IRR expressed to two decimal places. INFORMATION 5.4 Trendy Manufacturers is investigating the possibility of investing in one of two projects. The net cash flows for the two competing investment opportunities are as follows: Year 1 2 3 4 5 Project Ron R560 000 R500 000 R400 000 R200 000 R50 000 Project Hob R340 000 R340 000 R340 000 R340 000 R340 000 Each project requires an initial investment of R1 200 000. A scrap value of R50 000 (not included…
Use the information provided to answer the questions.Use the information provided below to calculate the following. Where applicable, use the presentvalue tables provided in APPENDICES 1 and 2 1. Calculate the Payback Period of Project A (expressed in years, months and days).2. Calculate the Accounting Rate of Return (on average investment) of Project B (expressed to twodecimal places).
Calculate the Payback Period of Project A (expressed in years, months and days) Calculate the Accounting Rate of Return on average investment of Project A (expressedto two decimal places). Calculate the Benefit Cost Ratio of both projects (expressed to two decimal places). Which project should be chosen? Why? Calculate the Internal Rate of Return of Project B (expressed to two decimal places). Youranswer must include two net present value calculations (using consecutiverates/percentages) and interpolation.
REQUIRED Use the information provided below to calculate the following: 5.1 Payback Period of both projects (expressed in years, months and days). 5.2 Accounting Rate of Return (on initial investment) of Project Spik (expressed to two decima places). 5.3 Net Present Value of both projects. 5.4 Internal Rate of Return of Project Spik (expressed to two decimal places). Your answer must include two net present value calculations (using consecutive rates/percentages) and interpolation. INFORMATION Telco Ltd had to choose between purchasing machinery for two projects, Spik and Span, for which the following profits are forecast: Year 1 2 3 4 Spik R70 000 R70 000 R70 000 R70 000 Span R20 000 R60 000 R120 000 R70 000 Each project requires an investment of R800 000. Project Span is expected to have a scrap value of R40 000. The cost of capital is 12%. The straight-line method of depreciation is used. Ignore taxes.
2.1 Calculate the Payback Period of both projects (answers expressed in years, months and days.) Which project would you choose on the basis of payback period? Why?2.2 Calculate the Accounting Rate of Return for both projects (answer expressed to two decimal places).2.3 Calculate the Net Present Value for both projects. (Round off amounts to the nearest Rand.)2.4 Based on your calculations from 2.1 – 2.3, which project should Rothmans Limited choose? Why? .
Use the information provided below to answer the following questions: 5.1 Calculate the Payback Period of Machine B (exoressed in years, months and days). 5.2 Calculate the Accounting Rate of Return (on average investment) of both machines (expressed to two decimal places). 5.3 Calculate the Net Present Value of each machine. 5.4 Which machine should be chosen if the time value of money is taken into account? Why? 5.5 Calculate the Internal Rate of Return of Machine B using interpolation (expressed to two decimal places), if the net cash flows are R140 000 per year for five years. INFORMATION Salsa Limited intends purchasing a new machine and has a choice between two machines, of which only one can be chosen. The following information pertaining to the two machines is available: Machine A Machine B Initial cost R500 000 R500 000 Cost of capital 14% 14% Expected economic life 5 years 5 years Expected disposal value R50 000 Depreciation per year R90 000 R100 000 Expected net profit Year…
3.1 Calculate the payback period for both projects each (year, month and days)3.2 Calculate the accounting rate of return for each project.3.3 Use the net present value (NPV) method to determine which project should be chosen.3.4 Briefly discuss the merits of using the NPV method
Calculate the payback period for both projects each (year, month and days).3.2 Calculate the accounting rate of return for each project. 3.3 Use the net present value (NPV) method to determine which project should be chosen.3.4 Briefly discuss the merits of using the NPV method
REQUIRED Calculate the Payback Period of Machine A (expressed in years, months and days). Calculate the Net Present Value of both Calculate the Accounting Rate of Return on initial investment (expressed to two decimal places) of both machines. Calculate the Internal Rate of Return of Machine B (expressed to two decimal places). If the time value of money is taken into account, which machine should be chosen? Why? INFORMATION The directors of Lomax Ltd intend expanding the company and they have the choice of purchasing one of two machines at the end of 2022 viz. Machine A or Machine B. Both machines have a five-year life, with only Machine A having a residual value of R300 000. The annual volume of production of each machine is estimated at 6 000 pallets (comprising 500 bricks each), which can be sold at R520 per pallet. Depreciation is calculated on the machines using the…
Iggy Company is considering three capital expenditure projects. Relevant data for the projects are as follows. Annual Life of Project Investment Income Project 22A $242,800 $16,840 6 years 23A 275,000 20,680 9 years 24A 282,000 15,700 7 years Annual income is constant over the life of the project. Each project is expected to have zero salvage value at the end of the project. Iggy Company uses the straight-line method of depreciation. Click here to view PV table. (a)
Question Help Use the NPV method to determine whether Smith Products should invest in the following projects: Project A: Costs $270,000 and offers eight annual net cash inflows of $57,000. Smith Products requires an annual return of 14% on investments of this nature. Project B: Costs $390,000 and offers 10 annual net cash inflows of $74,000. Smith Products demands an annual return of 12% on investments of this nature. (Click the icon to view Present Value of $1 table.) (Click the icon to view Present Value of Ordinary Annuity of $1 table.) Read the requirements. Requirement 1. What is the NPV of each project? Assume neither project has a residual value. Round to two decimal places. (Enter any factor amounts to three decimal places, X.XXX. Use parentheses or a minus sign for a negative net present value.) Caclulate the NPV (net present value) of each project. Begin by calculating the NPV of Project A. Project A: Net Cash Annuity PV Factor Present Years Inflow (i=14%, n=8) Value 1 - 8…

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