A fixed capital investment of P10 million is required for a proposed manufacturing plant and an estimated working capital of P 2 million. Annual depreciation is estimated to be 10% of the first capital investment. Determine the rate of return on the total investment and the payout period if the annual profit of P2.5 million.

A fixed capital investment of P10 million is required for a proposed manufacturing plant and an estimated working capital of P 2 million. Annual depreciation is estimated to be 10% of the first capital investment. Determine the rate of return on the total investment and the payout period if the annual profit of P2.5 million.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 19EA: Redbird Company is considering a project with an initial investment of $265,000 in new equipment...

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