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
                                         ($)        ($)
Â
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
Â
You are asked to advise which proposal would be financially preferable.
Answers
Status NEW
Posted 25 Apr 2017 09:04 AM
My Price 5.00
-----------
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
Not Rated(0)