Assignmentequipment, the useful life of which is four years.The net cash flows for the two projects are provided in the table below:Net Cash Flow (GH¢)Project Year 1Year 2Year 3Year 412,5502,4501,7001,4001,2401,5502,1003,800end of its life.i.Find the payback period for each project.Establish the net present value for each project using discount rate of 20%.Establish the net present value for each project using discount rate of 25%.Determine the internal rate of return for each project.iii.iv.Using the payback criterion and the internal rate of return criterion advice theproprietor on the project he should undertake, giving reasons for your choice ofproject.V.70

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Assignment equipment, the useful life of which is four years. he net cash flows for the two projects are provided in the table below: Net Cash Flow (GH¢) Project Year 1 Year 2 Year 3 Year 4 1 2,550 2,450 1,700 1,400 2 1,240 1,550 2,100 3,800

Assignment equipment, the useful life of which is four years. he net cash flows for the two projects are provided in the table below: Net Cash Flow (GH¢) Project Year 1 Year 2 Year 3 Year 4 1 2,550 2,450 1,700 1,400 2 1,240 1,550 2,100 3,800

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 4BE: Internal rate of return A project is estimated to cost 463,565 and provide annual net cash flows of...

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Question

Assignment
equipment, the useful life of which is four years.
The net cash flows for the two projects are provided in the table below:
Net Cash Flow (GH¢)
Project Year 1
Year 2
Year 3
Year 4
1
2,550
2,450
1,700
1,400
1,240
1,550
2,100
3,800
end of its life.
i.
Find the payback period for each project.
Establish the net present value for each project using discount rate of 20%.
Establish the net present value for each project using discount rate of 25%.
Determine the internal rate of return for each project.
iii.
iv.
Using the payback criterion and the internal rate of return criterion advice the
proprietor on the project he should undertake, giving reasons for your choice of
project.
V.
70

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