7 The directors of Yorkshire Autopoints are considering the acquisition of an automatic car-washing installation. The initial
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7 The directors of Yorkshire Autopoints are considering the acquisition of an automatic car-washing installation.
The initial cost and setting-up expenses will amount to about £140,000. Its estimated life is about seven years, and estimated annual accounting profit is as follows:
At the end of its seven-year life, the installation will yield only a few pounds in scrap value. The company classifies its projects as follows:
Car-washing projects are estimated to be of average risk.
(a) Should the car-wash be installed?
(b) List some of the popular errors made in assessing capital projects.
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Corporate Finance And Investment Decisions And Strategies
ISBN: 9780273695615
5th Edition
Authors: Richard Pike, Bill Neale
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