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Category > Accounting Posted 25 Apr 2017 My Price 5.00

QUESTION CAPITAL BUDGETING

QUESTION :CAPITAL BUDGETING

X Company is exmanining two mutually exclusive proposals for new capital investment.The data on the proposals are as follows

                                          A           B

                                          ($)         ($)

 

Net cash outlay                           40000       50000

Salvage value                             Nil         Nil

Estimated life                            4 years     4 years

Depricistion                              SLM         SLM

Income Tax rate                           50%         50%

Cut off rate for appraisal                10%         10%

EBIT

Ist Year                                  12000       14000

2nd Year                                  14000       16000

3rd Year                                  16000       18000

4th Year                                  22000       22000

5th Year                                  -           20000

 

You are asked to advise which proposal would be financially preferable.

Answers

(8)
Status NEW Posted 25 Apr 2017 09:04 AM My Price 5.00

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Attachments

file 1493111083-539835_1_SOLUTION-3.xls preview (58 words )
-----------SOL-----------UTI-----------ON -----------:a)----------- De-----------ter-----------min-----------ati-----------on -----------of -----------CFA-----------T (-----------EAT----------- + -----------Dep-----------ric-----------iat-----------ion-----------) f-----------or -----------bot-----------h t-----------he -----------pro-----------pos-----------als-----------PRO-----------POS-----------AL -----------AYE-----------ARG-----------ros-----------s E-----------arn-----------ing-----------sDe-----------pTa-----------xab-----------le -----------Inc-----------ome-----------112-----------000-----------100-----------002-----------000-----------214-----------000-----------100-----------004-----------000-----------316-----------000-----------100-----------006-----------000-----------422-----------000-----------100-----------001-----------200-----------050-----------00P-----------ROP-----------OSA-----------L A-----------114-----------000-----------100-----------004-----------000-----------216-----------000-----------100-----------006-----------000-----------318-----------000-----------100-----------008-----------000-----------422-----------000-----------100-----------001-----------200-----------052-----------000-----------010-----------000-----------100-----------00b-----------) D-----------ete-----------rmi-----------nat-----------ion----------- of----------- eq-----------uiv-----------ale-----------nt -----------ann-----------ual----------- ne-----------t p-----------res-----------ent----------- va-----------lue----------- (E-----------ANP-----------V)C-----------FAT-----------Yea-----------rPr-----------opo-----------sal----------- AP-----------rop-----------osa-----------l B-----------PV -----------Fac-----------tor----------- @ -----------10%-----------111-----------000-----------120-----------000-----------.90-----------921-----------200-----------013-----------000-----------0.8-----------263-----------130-----------001-----------400-----------00.-----------751-----------416-----------000-----------160-----------000-----------.68-----------350-----------150-----------000-----------.62-----------1Le-----------ss
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