Question
IMF Industries has $ 265,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives follows Project A
IMF Industries has $ 265,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives follows
Project A Project B
Cost of equipment required $265,000
Working capital investment required $265,000
Annual Cash inflow $55,650 $ 42,400
Residue value of equipment in 8 years $21,200
Life of the project 8 Years 8 Years
The working capital needed for project B will be released at the end of eight years for investment elsewhere. The interest rate is 15%. Which investment option would you suggest?
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Accounting For Non-Accounting Students
Authors: John R. Dyson, Ellie Franklin
9th Edition
978-1292128979, 1292128976
