Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I only need Net Present Value; thanks! Ranking Investment Proposals: Payback Period, Accounting Rate of Return, and Net Present Value Presented is information pertaining to

I only need Net Present Value; thanks! image text in transcribed
Ranking Investment Proposals: Payback Period, Accounting Rate of Return, and Net Present Value Presented is information pertaining to the cash flows of three mutually exclusive investment proposals: Free A Proposal Proposal 560.000 500.000 $60,000 Cash flow from operations 50.000 0.000 0.000 25000 ufer year years present value criteria. Assume that the organation's cost of capital is 12 percent (a) Select the best investment proposal using the payback period, the accounting rate of return on initial Round payback period (years) to two decimal places Round accounting rate of return to four decimal places . Round net present value to the nearest whole number Use negative with your answers, when appropriate Proposal Payback period year round answers a decimal places Accounting rate of return bound to decimal place Net present Hound answers to nearest whole number. 1 Proposal A 2.14 0 1 10.071 M 1 L NS MA (b) Factors explaining the differences in rankings include all of the following except: The accounting rate of return considers profitability while payback only considers the time required to recover the investment. While the accounting rate of return explicitly considers the cost of the asset as part of annual depreciation the net present value method considers the cost of the asset as part of the initialwestment *Net present value considers the timing of cash flows while payback considers only total cash flows. The net present value method considers the cost of capital while the payback method does not discount future cash flows. Check

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Principles

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso, Weygandt Kimmel Kieso

10th Edition

0470646462, 978-0470646465

More Books

Students also viewed these Accounting questions

Question

Calculate the frequency of Blue light with = 4800 A

Answered: 1 week ago

Question

Find the circumference of a circle with a diameter of 7.

Answered: 1 week ago

Question

Are your goals SMART?

Answered: 1 week ago