Question
A special effects process can be carried out by using a machine which can be acquired for Php450,000. The sources for these funds are as
A special effects process can be carried out by using a machine which can be acquired for Php450,000. The sources for these funds are as follows:
Source | Amount | Cost |
Short Term Stocks | Php 270,000 | 0.15 |
Common Stocks | Php 90,000 | 0.20 |
Marketable Securities | Php 90,000 | 0.05 |
Other data of the investment are as follows:
Life = 10 years
Value at end-of-life: Php 50,000
Annual Receipts = Php 150,000
Annual Disbursements = Php 60,000
Reinvestment Rate of Return = 13%
Is the investment justified? Use the following methods in testing its acceptability:
a. PW/NPV
b. AW
c. FW
d. IRR
e. ERR
f. ERRR
g. Simple payback when desired payback period is 4.5 years
h. Discounted payback
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