i) Calculate the Accounting Rate of Return for each project. ii) Calculate the Net present Value (NPV) for each project. iii)Compute the payback period for each project. (Note: In each of the above,advice the company on which of the project to implement or undertake)
ABC Ghana Ltd is considering investing in the following projects which are considered mutually exclusive
Project1 Project2
Annual
Cost of machine 2,500,000 6,000,000
Scrap value of machine 250,000 1,000,000
Expected time: 5years
A company in US uses the straight line method of depreciation. However, tax allowable depreciation is 30% on straight line basis. The cost of capital for the company is 20% per annum
i) Calculate the Accounting
ii) Calculate the
iii)Compute the payback period for each project.
(Note: In each of the above,advice the company on which of the project to implement or undertake)
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