Question
NOP Ltd. is considering two potential investments. The company's cost of capital is 14% and the tax rate is 25%. Details are provided below: Particulars
NOP Ltd. is considering two potential investments. The company's cost of capital is 14% and the tax rate is 25%. Details are provided below:
Particulars | Investment X | Investment Y |
Cost of investment | 23,00,000 | 27,00,000 |
Expected life | 5 years | 5 years |
Annual Income (before Tax & Depreciation) | 7,00,000 | 8,25,000 |
Depreciation is charged on a straight-line basis. You are required to calculate: a. Discounted payback period b. NPV c. Profitability index
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Management and Cost Accounting
Authors: Colin Drury
8th edition
978-1408041802, 1408041804, 978-1408048566, 1408048566, 978-1408093887
