A B Initial investment outlay ($) 200,000 275,000 Freight Charges ($) 20,000 30,000 Set Up charges ($) 5,000 7,000 Economic Life (Years) 10 10 Liquidation value at end of economic life ($) 12,000 17,000 Other fixed costs ($) 4,000 20,000 Production and sales volume (units) 9,000 12,000 Sales Price ($) 15 15 Variable Cost ($) 2.45 2.00 Rate of interest (%) 6 6 Ascertain the preferred project using: a. The profit comparison method.
A B Initial investment outlay ($) 200,000 275,000 Freight Charges ($) 20,000 30,000 Set Up charges ($) 5,000 7,000 Economic Life (Years) 10 10 Liquidation value at end of economic life ($) 12,000 17,000 Other fixed costs ($) 4,000 20,000 Production and sales volume (units) 9,000 12,000 Sales Price ($) 15 15 Variable Cost ($) 2.45 2.00 Rate of interest (%) 6 6 Ascertain the preferred project using: a. The profit comparison method.
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
Related questions
Question
A | B | |
Initial investment outlay ($) | 200,000 | 275,000 |
Freight Charges ($) | 20,000 | 30,000 |
Set Up charges ($) | 5,000 | 7,000 |
Economic Life (Years) | 10 | 10 |
Liquidation value at end of economic life ($) | 12,000 | 17,000 |
Other fixed costs ($) | 4,000 | 20,000 |
Production and sales volume (units) | 9,000 | 12,000 |
Sales Price ($) | 15 | 15 |
Variable Cost ($) | 2.45 | 2.00 |
Rate of interest (%) | 6 | 6 |
Ascertain the preferred project using:
a. The profit comparison method.
b. The average
c. The static payback method
d. Re-evaluate the projects using the
the same? If different, what reasons can you offer?
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