Homework Help is Here – Start Your Trial Now!
Business
Accounting
5.1.1 Calculate the Payback Period of Project A (expressed in years, months and days). 5.1.2 Calculate the Accounting Rate of Return (on average investment) of Project B (expressed to two decimal places). 5.1.3 Calculate the Net Present Value of each project (with amounts rounded off to the nearest Rand). 5.1.4 Use your answers from question 5.1.3 to recommend the project that should be chosen. Motivate your choice.

5.1.1 Calculate the Payback Period of Project A (expressed in years, months and days). 5.1.2 Calculate the Accounting Rate of Return (on average investment) of Project B (expressed to two decimal places). 5.1.3 Calculate the Net Present Value of each project (with amounts rounded off to the nearest Rand). 5.1.4 Use your answers from question 5.1.3 to recommend the project that should be chosen. Motivate your choice.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
100%
Additional information The discount rate used by the company is 12%. APPENDIX 1: PRESENT VALUE OF R1 Numer F spoved 15 2% 3% 16 No 1 IN 65 7% 8% 9% 19% 1% 12% 12% 14% 15% 16% 17% 18% 141004 03 565 49534 03434 09546 65250 694340.309143006 08629 08800 0.4772 1.850 821 0854 1875 4841) 833 08008 24.5013 03412 09425 1246 4900 0.8990 0823M4 48573 08417 88264 88116 07872 67631 8.7996 07561 07432 07305 1716243062 184 05400 305/160503 08151 CHI0 08630 04356 363 4.7908 67722 47513 0.2362 0718 6881 16750 84575 06417 05364 4.406694 05747 05120 HHH 0813545821 4.571 65523 05130515864047 0482314 05428 4.5144 41 048 64 6410 24019 3277 405010 A 465 08543 08227 1.7621 87625 6.7350 47564 0.4850 44547 063656 20 10% 20% 48515 03067 0362 0827047835 4.7473 67139 08806 0548 15294015 056 H 09430.81 4.8375 67500 0.7462 4.7050 4.6663 0832 05863 15645 0534 03316 04101 64356 0433 04154 0.3800 4.3754 63621 0.33643621 765327 3.876 48131 0.7509 6.71046661 44277 05835 05479 65132 04317 8.4533 04251 4.3096 63739 6.35 1.3332 03139621696.271 4.2017 4235.85364.784 073870668442714 1.5830 054110501164645 6432054630 4.375263506 6310 4.3850 0.3844 02860 62412125468 14343 ENE 0.74 67% 6545 5911 050206580004656 04541 638498306 63329 6305 625438.38368344 022566290418 4.152 ▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬ 16 09453 4423 47441 05756 06139 €5564 45863 0.4632 04234 6.365 0.3522 1.3229 62566 0.250 02472 6.2257 4.200 0015616154 H H 1863 489-3 4.7224 0.5496 03847 65266 047 0439 43875 0.3605 6373 4.3605 4.3667 0.2366 62:49 1.1954 &1778 01691475 136 L 41 20% + 12 4.864 7885 0.7014 0.4366 45566 04379 04440 6.3671 4.3556 03986 62158 42567 4.2347 0.26760486941685 4.1530 01372 01349 41122 COP H 13 48757 67730 06810 48006 4.580 04584 64150 43677 0.3262 02867 0.2175 62250 0.3842 01821 0.1625 414521299 01165 0.1042 CON 0040 408700 67579 0861 2871505861 04423 6375 4.3405 82960 62413 0729 432546 45941701587 0.1413 61252 AFO 0085 AM 00779 004 150813 0765 65419 42563 04810 64173 0.32843162 4.27246 02254 02100 4.1827 4153790 0.1401 81229 4138795 060903454RTH 00646 0163 M ++ 4.8534 0736406232 46310 4.4581 0.3636 0.338 4.2919 0.259 0216 A1883 CH31 61415 0.1229 41066 00639 0811 01708 6.001603541 00081 17 08444 07142 0850 4.5134 04363 03714 63106 42703 42311 4.1978 0.164 0145661252 1078 0.620 0062 60603 0.0000 45000431 0325 083600786 85814 04336 04116 63533 0.2160 42562 62520 4172941520 1300110829460 00601 03 050 42417 08376 03160 68377 DEGA 453701 04273 83807 1386 42796 02317 41545 4105 4197 0161 0064 2065 44790 09106 00186 1643151547 08313131646 H 4815 03730 0.5637 64504 6.3760 03118 0.2584 62545 01764 0.1416 4124001837 00868 4.6728 60611 0351400433 135 0321311 ++ 63755 6.253 4230 4.5842 05463 6140 1034.6736 03566 20471 4435 034 045 0100160 60129 0.0195 4.03 0.7756 3.3055 64776 36.3410 A1621 44120 03143 62314 41741 4.1314 00094 0754 60573 48437 033546315640196 0151 00116 2006 60870 40654 1.3042 88012 ▬▬▬▬▬▬▬▬▬▬ 86717 8.4526 6.3066 02963 6.100 4.8072 0.0664 00460 0311 6621 40154 00137 00075 C0053 00017 05 06 08013600 1.007 44001 M 0.6080 43716 0.328105407 0.08077 46543 06330 08213 0054 055 054 305 00622 0001400000 0.0004 3004 0.003 002 01 * 8.30044.304841697 0.081 0056 33 40113 0.03000 1305 4063360919 4.3011 4.900 00064 CON24.001 0.0001 1.
Transcribed Image Text:Additional information The discount rate used by the company is 12%. APPENDIX 1: PRESENT VALUE OF R1 Numer F spoved 15 2% 3% 16 No 1 IN 65 7% 8% 9% 19% 1% 12% 12% 14% 15% 16% 17% 18% 141004 03 565 49534 03434 09546 65250 694340.309143006 08629 08800 0.4772 1.850 821 0854 1875 4841) 833 08008 24.5013 03412 09425 1246 4900 0.8990 0823M4 48573 08417 88264 88116 07872 67631 8.7996 07561 07432 07305 1716243062 184 05400 305/160503 08151 CHI0 08630 04356 363 4.7908 67722 47513 0.2362 0718 6881 16750 84575 06417 05364 4.406694 05747 05120 HHH 0813545821 4.571 65523 05130515864047 0482314 05428 4.5144 41 048 64 6410 24019 3277 405010 A 465 08543 08227 1.7621 87625 6.7350 47564 0.4850 44547 063656 20 10% 20% 48515 03067 0362 0827047835 4.7473 67139 08806 0548 15294015 056 H 09430.81 4.8375 67500 0.7462 4.7050 4.6663 0832 05863 15645 0534 03316 04101 64356 0433 04154 0.3800 4.3754 63621 0.33643621 765327 3.876 48131 0.7509 6.71046661 44277 05835 05479 65132 04317 8.4533 04251 4.3096 63739 6.35 1.3332 03139621696.271 4.2017 4235.85364.784 073870668442714 1.5830 054110501164645 6432054630 4.375263506 6310 4.3850 0.3844 02860 62412125468 14343 ENE 0.74 67% 6545 5911 050206580004656 04541 638498306 63329 6305 625438.38368344 022566290418 4.152 ▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬ 16 09453 4423 47441 05756 06139 €5564 45863 0.4632 04234 6.365 0.3522 1.3229 62566 0.250 02472 6.2257 4.200 0015616154 H H 1863 489-3 4.7224 0.5496 03847 65266 047 0439 43875 0.3605 6373 4.3605 4.3667 0.2366 62:49 1.1954 &1778 01691475 136 L 41 20% + 12 4.864 7885 0.7014 0.4366 45566 04379 04440 6.3671 4.3556 03986 62158 42567 4.2347 0.26760486941685 4.1530 01372 01349 41122 COP H 13 48757 67730 06810 48006 4.580 04584 64150 43677 0.3262 02867 0.2175 62250 0.3842 01821 0.1625 414521299 01165 0.1042 CON 0040 408700 67579 0861 2871505861 04423 6375 4.3405 82960 62413 0729 432546 45941701587 0.1413 61252 AFO 0085 AM 00779 004 150813 0765 65419 42563 04810 64173 0.32843162 4.27246 02254 02100 4.1827 4153790 0.1401 81229 4138795 060903454RTH 00646 0163 M ++ 4.8534 0736406232 46310 4.4581 0.3636 0.338 4.2919 0.259 0216 A1883 CH31 61415 0.1229 41066 00639 0811 01708 6.001603541 00081 17 08444 07142 0850 4.5134 04363 03714 63106 42703 42311 4.1978 0.164 0145661252 1078 0.620 0062 60603 0.0000 45000431 0325 083600786 85814 04336 04116 63533 0.2160 42562 62520 4172941520 1300110829460 00601 03 050 42417 08376 03160 68377 DEGA 453701 04273 83807 1386 42796 02317 41545 4105 4197 0161 0064 2065 44790 09106 00186 1643151547 08313131646 H 4815 03730 0.5637 64504 6.3760 03118 0.2584 62545 01764 0.1416 4124001837 00868 4.6728 60611 0351400433 135 0321311 ++ 63755 6.253 4230 4.5842 05463 6140 1034.6736 03566 20471 4435 034 045 0100160 60129 0.0195 4.03 0.7756 3.3055 64776 36.3410 A1621 44120 03143 62314 41741 4.1314 00094 0754 60573 48437 033546315640196 0151 00116 2006 60870 40654 1.3042 88012 ▬▬▬▬▬▬▬▬▬▬ 86717 8.4526 6.3066 02963 6.100 4.8072 0.0664 00460 0311 6621 40154 00137 00075 C0053 00017 05 06 08013600 1.007 44001 M 0.6080 43716 0.328105407 0.08077 46543 06330 08213 0054 055 054 305 00622 0001400000 0.0004 3004 0.003 002 01 * 8.30044.304841697 0.081 0056 33 40113 0.03000 1305 4063360919 4.3011 4.900 00064 CON24.001 0.0001 1.
Question 5 Use the information provided to answer the questions. 5.1 Use the information provided below to calculate the following. Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after QUESTION 5. 5.1.1 Calculate the Payback Period of Project A (expressed in years, months and days). 5.1.2 Calculate the Accounting Rate of Return (on average investment) of Project B (expressed to two decimal places). 5.1.3 Calculate the Net Present Value of each project (with amounts rounded off to the nearest Rand). 5.1.4 Use your answers from question 5.1.3 to recommend the project that should be chosen. Motivate your choice. INFORMATION Zeda Enterprises has the option to invest in machinery in projects A and B but finance is only available to invest in one of them. You are given the following projected data: Initial cost Scrap value Depreciation per year Net profit Year 1 Year 2 Year 3 Year 4 Year 5 Net cash flows Year 1 Year 2 Year 3 Year 4 Year 5 Project A R300 000 R40 000 R52 000 R20 000 R30 000 R50 000 R60 000 R10 000 Project B R300 000 0 R60 000 R90 000 R90 000 R90 000 R90 000 R90 000
Transcribed Image Text:Question 5 Use the information provided to answer the questions. 5.1 Use the information provided below to calculate the following. Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after QUESTION 5. 5.1.1 Calculate the Payback Period of Project A (expressed in years, months and days). 5.1.2 Calculate the Accounting Rate of Return (on average investment) of Project B (expressed to two decimal places). 5.1.3 Calculate the Net Present Value of each project (with amounts rounded off to the nearest Rand). 5.1.4 Use your answers from question 5.1.3 to recommend the project that should be chosen. Motivate your choice. INFORMATION Zeda Enterprises has the option to invest in machinery in projects A and B but finance is only available to invest in one of them. You are given the following projected data: Initial cost Scrap value Depreciation per year Net profit Year 1 Year 2 Year 3 Year 4 Year 5 Net cash flows Year 1 Year 2 Year 3 Year 4 Year 5 Project A R300 000 R40 000 R52 000 R20 000 R30 000 R50 000 R60 000 R10 000 Project B R300 000 0 R60 000 R90 000 R90 000 R90 000 R90 000 R90 000
Expert Solution
steps

Step by step

Solved in 3 steps with 3 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Capital Budgeting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS