Mr. A has $100,000 to invest in either Scheme X or Scheme Y. The cash flows from both the schemes are as follows: Year Scheme X ($) Scheme Y ($) 1 30,000 41,000 2 45,500 25,200 3 20,000 22,000 4 15,750 20,000 Advice which scheme Mr. A should opt on the basis of early return of initial investment.

Mr. A has $100,000 to invest in either Scheme X or Scheme Y. The cash flows from both the schemes are as follows: Year Scheme X ($) Scheme Y ($) 1 30,000 41,000 2 45,500 25,200 3 20,000 22,000 4 15,750 20,000 Advice which scheme Mr. A should opt on the basis of early return of initial investment.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Mr. A has $100,000 to invest in either Scheme X or Scheme Y. The cash flows from both the schemes are as follows:

Year	Scheme X ($)	Scheme Y ($)
1	30,000	41,000
2	45,500	25,200
3	20,000	22,000
4	15,750	20,000

Advice which scheme Mr. A should opt on the basis of early return of initial investment.

Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).

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