Don't Answer the Payback Period since its already been answered YOURUNDARSIANDINGDirections: Evaluate the following projects. Which is the best among them using the differenttools in capital budgeting?Use the following tools to make yourProjectCash outlayAВP920,000decisions:P1,000,000310,000P880,0001. Payback period2. Net present value3. Accounting rate of return4. Profitability indexNet Cash inflow Year 1200,000290,000Year 2310,000220,000280,000Year 3310,000250,000300,000Year 4310,000180,000250,000Year 5310,00090,000295,000Year 6310,00090,000195,000Salvage value70,00080,000Discount rate10%8%12%Economic life4 years5 years6 years

Project A B C Cash outlay 10,00,000 8,80,000 9,20,000 Net cashflow 1…

Answered: 2. Net present value 3. Accounting rate…

Business

Finance

2. Net present value 3. Accounting rate of return 4. Profitability index

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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Question

Don't Answer the Payback Period since its already been answered

YOUR
UNDARSIANDING
Directions: Evaluate the following projects. Which is the best among them using the different
tools in capital budgeting?
Use the following tools to make your
Project
Cash outlay
A
В
P920,000
decisions:
P1,000,000
310,000
P880,000
1. Payback period
2. Net present value
3. Accounting rate of return
4. Profitability index
Net Cash inflow Year 1
200,000
290,000
Year 2
310,000
220,000
280,000
Year 3
310,000
250,000
300,000
Year 4
310,000
180,000
250,000
Year 5
310,000
90,000
295,000
Year 6
310,000
90,000
195,000
Salvage value
70,000
80,000
Discount rate
10%
8%
12%
Economic life
4 years
5 years
6 years

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