T3 Tools is considering three long-term capital investment proposals. Each investment has a useful life of 5
Question:
T3 Tools is considering three long-term capital investment proposals. Each investment has a useful life of 5 years. Relevant data (in thousands) on each project are as follows.
Depreciation is computed by the straight-line method with no residual value. The company’s cost of capital is 15%. (Assume that cash fl ows occur evenly throughout the year.)
Instructions
a. Compute the cash payback period for each project. (Round to two decimals.)
b. Compute the net present value for each project. (Round to nearest rupiah.)
c. Compute the annual rate of return for each project. (Round to two decimals.)
d. Rank the projects on each of the foregoing bases. Which project do you recommend?
Net Present ValueWhat is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at... Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of... Payback Period
Payback period method is a traditional method/ approach of capital budgeting. It is the simple and widely used quantitative method of Investment evaluation. Payback period is typically used to evaluate projects or investments before undergoing them,...
Step by Step Answer:
a Project Tandoko Rp 160000 Rp14000 Rp32000 348 years Project Tanoto Year Cash Flow Cumulative Cash ...View the full answer
Accounting Principles
ISBN: 978-1119419617
IFRS global edition
Authors: Paul D Kimmel, Donald E Kieso Jerry J Weygandt
