REQUIRED Study the information given below and calculate the Accounting Rate of Return on initial investment (expressed to two decimal places) of each project. INFORMATION The following data relate to two investment projects, only one of which may be selected: Project A Project B R R Initial capital expenditure 180 000 180 000 Net cash inflow per year: Year 1 90 000 36 000 Year 2 72 000 36 000 Year 3 54 000 86 000 Year 4 36 000 94 000 Expected scrap value (not included in the figures above) 36 000 0 Note: Depreciation is calculated using the straight-line The cost of capital is 15%. REQUIRED Use the capital asset pricing model to calculate the cost of the ordinary shares from the information provided below. INFORMATION The financial managers of Computex have the following information at their disposal: The risk-free rate is presently 14%. The company’s beta coefficient is 0.90. The return on the JSE’s overall index is presently 20.6%.
- REQUIRED
Study the information given below and calculate the Accounting Rate of
investment (expressed to two decimal places) of each project.
INFORMATION
The following data relate to two investment projects, only one of which may be selected:
|
|
Project A |
Project B |
|
|
R |
R |
|
Initial capital expenditure |
180 000 |
180 000 |
|
Net |
|
|
|
Year 1 |
90 000 |
36 000 |
|
Year 2 |
72 000 |
36 000 |
|
Year 3 |
54 000 |
86 000 |
|
Year 4 |
36 000 |
94 000 |
|
Expected scrap value (not included in the figures above) |
36 000 |
0 |
Note:
- Depreciation is calculated using the straight-line
- The cost of capital is 15%.
REQUIRED
Use the
INFORMATION
The
The risk-free rate is presently 14%.
The company’s beta coefficient is 0.90.
The return on the JSE’s overall index is presently 20.6%.
Step by step
Solved in 2 steps
