Question
AUGUST 26 LOGISTICS (PTY) LTD is in WINDHOEK, Namibia and is part of the Food Manufacturing Industry. AUGUST 26 LOGISTICS (PTY) LTD has 30 total
AUGUST 26 LOGISTICS (PTY) LTD is in WINDHOEK, Namibia and is part of the Food Manufacturing Industry. AUGUST 26 LOGISTICS (PTY) LTD has 30 total employees across all its locations and generates $4.89 million in sales (USD). (Employees figure is estimated, Sales figure is modelled). AUGUST 26 LOGISTICS (PTY) LTD is considering two projects. The projects are similar in nature and are expected to both operate for four years. Due to unavailability of funds to undertake both, only one project can be accepted. The cost of capital is 12% and depreciation is charged on the straight-line basis. The following information is available:
| Profit after depreciation | |
Project A | Project B | |
Initial investment | 46 000 | 46 000 |
Year 1 | 6 500 | 4 500 |
Year 2 | 3 500 | 2 500 |
Year 3 | 13 500 | 4 500 |
Year 4 | (1 500) | 14 500 |
Estimated scrap value at the end of year 4 | 4 000 | 4 000 |
Calculate the Payback period Proposal A to the nearest whole number
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