Evaluating projects by the payback period and the rate of return on investment Four capital expenditure proposals received by the Sutherland Company are described below The treasurer of the company recommends that the projects be ranked according to payback period Management can select those projec...

The Answer is in the image, click to view ...

Evaluating projects by the payback period and the rate of return on investment. Four capital expenditure proposals

Question:

Evaluating projects by the payback period and the rate of return on investment. Four capital expenditure proposals received by the Sutherland Company are described below.

image text in transcribed

The treasurer of the company recommends that the projects be ranked according to payback period. Management can select those projects from which the investment will be recovered most rapidly. The controller recommends ranking the projects by rate of return on investment.
Instructions 1. Calculate the payback period for each proposal. Round off your answer to one decimal place. Rank the proposals in order by payback period.
2. Calculate the rate of return on investment for each proposal, using the initial investment as the base. Round off to the nearest tenth of a percent. Rank the proposals in order by rate of return on investment.
3. Which ranking would you prefer? Why?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Answer rating: 100% (QA)

Answered By

Asim farooq

I have done MS finance and expertise in the field of Accounting, finance, cost accounting, security analysis and portfolio management and management, MS office is at my fingertips, I want my client to take advantage of my practical knowledge. I have been mentoring my client on a freelancer website from last two years, Currently I am working in Telecom company as a financial analyst and before that working as an accountant with Pepsi for one year. I also join a nonprofit organization as a finance assistant to my job duties are making payment to client after tax calculation, I have started my professional career from teaching I was teaching to a master's level student for two years in the evening. My Expert Service Financial accounting, Financial management, Cost accounting, Human resource management, Business communication and report writing. Financial accounting : • Journal entries • Financial statements including balance sheet, Profit & Loss account, Cash flow statement • Adjustment entries • Ratio analysis • Accounting concepts • Single entry accounting • Double entry accounting • Bills of exchange • Bank reconciliation statements Cost accounting : • Budgeting • Job order costing • Process costing • Cost of goods sold Financial management : • Capital budgeting • Net Present Value (NPV) • Internal Rate of Return (IRR) • Payback period • Discounted cash flows • Financial analysis • Capital assets pricing model • Simple interest, Compound interest & annuities

4.40+ 65+ Reviews 86+ Question Solved

Related Book For book-img-for-question

Cost Accounting Principles And Applications

ISBN: 9780070081529

5th Edition

Authors: Horace R. Brock

See More Books

Question Posted: Jun 24, 2024 02:03 AM

See More Questions

Evaluating projects by the payback period and the rate of return on investment. Four capital expenditure proposals

Question:

Investment Required Annual Cash Earnings Depreciable Life in Years Proposal A $250,000 Proposal B $779,000 Proposal C Proposal D $785.000 $219,000 48,000 $160,000 $200,000 $ 32,000 10 25 10 20

Step by Step Answer:

Cost Accounting Principles And Applications

Students also viewed these Business questions