(i) Calculate the payback period. Year Cash Flow Cumulative Cash Flow $ Note: Copy the above table and complete the calculations in the answer booklet. (ii) Calculate the net present value. Year Cash Flow Discount Factor at Present Value (to fill the discount factor) $ $ Note: Copy the above table and complete the calculations in the answer booklet. (iii) Advise the management as to whether they should proceed to procure the new equipment. (iv) La Vie Limited is presented with Project Sunny and Project Cloudy. Project Sunny has a payback period of 4.4 years, while Project Cloudy has a payback period of 3.7 years. The company policy is to accept only projects with a payback period of 4 years and below. [Note that part c is independent of part a and b] Required: Advise La Vie Limited, which project should be undertaken and why.
(i) Calculate the payback period. Year Cash Flow Cumulative Cash Flow $ Note: Copy the above table and complete the calculations in the answer booklet. (ii) Calculate the net present value. Year Cash Flow Discount Factor at Present Value (to fill the discount factor) $ $ Note: Copy the above table and complete the calculations in the answer booklet. (iii) Advise the management as to whether they should proceed to procure the new equipment. (iv) La Vie Limited is presented with Project Sunny and Project Cloudy. Project Sunny has a payback period of 4.4 years, while Project Cloudy has a payback period of 3.7 years. The company policy is to accept only projects with a payback period of 4 years and below. [Note that part c is independent of part a and b] Required: Advise La Vie Limited, which project should be undertaken and why.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 2CE
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