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Please solve this all question in detail and exact solutions it's really important ... Thanks Q2. A company has the option of investing in Project
Please solve this all question in detail and exact solutions it's really important ... Thanks
Q2. A company has the option of investing in Project A or Project B, but not both. The company uses a discount rate of 14% and depreciates assets using the straight line method. Project A requires an initial investment of 70,000 and Project B requires an initial investment of 60,000. The equipment purchased for Project A would be disposed of at the end of year 5 with a 10,000 scrap value. The equipment purchased for Project B would be disposed of at the end of year 3 with a nil scrap value. The profit projections for the two projects (excluding the initial investments and scrap values) are: Year Profit (6) Project A | Project B 34,000 30,000 40,000 44,000 41,000 31,000 41,000 31,000 5 28,000 1 WN 4 (a) Calculate the payback period for both projects. (15 marks) (b) Calculate the NPV (Net Present Value) for both projects. See Table 2a. (25 marks) (c) Advise the company on which project to accept (stating your reasons based on depreciation and profitability index). (10 marks) PAUN TABLE A-PRESENT VALUE OF ONE UNIT-VALUE OF MONEY Years Hence 1% 2% * %% 1012% 14% 15% 16% 10% 20% 22% 21% 25% 20% 2% 30% 35% 40% 4% 5% 0-2200-2800-20-90 0.9260-909-893 10-0710-870 0-8620-8070-833 820 10-8960-200 0-7540-781 0-7690-7410-7140-6900-667 0-9800 961 0.025 0-890 0-8570-8261-79110-7090-756-7439-71810-0940-672-650-6400-630 0.610 0-9920-5490-506-476 044 10-9710-9420 819 0-2400-7949-751-712 0-675 - 658 -6 0-609 0-5790-5510-524 0-512-500 0-471 0-155-406 - X-328 0-2% 16-01-9249-8557972-7330-603-60-592 0-372-552 0-516 0-4320-451 10 423 0-410 09970-173 - 1500-301 260 -226 0-198 0-9510.9060-822 0-7470-687 0-6216-5670-5190-497-4760-4370-4020-370-341 0-3286-3150-291-29 0-2230-1866-1560-132 0.22 0.8880-790 0.705 0-63010-5640-5070-4560-4320-410 0-37010-3350-3030-2750-2620-2500-2270-2970-1650-135 D-1080-08 7 0.933 08710-7600-650-583 0-513 0-521-4000-3760-3540-3140-20910-2490-2220-2100-1980-57810-1990-122 0-095 0-074 0-099 0.923 0.8530-7310-627-5400-46710-40+ 0-3510 3270-305 0-2660-233 U-2040-1790-168 9 $39 0.123 0-000-060 051 0-009 0-7140-81707030.9925000 4240 3610-80-2840-263-2250-194 - 1670-1440-134 0940-0670-040-0350-026 10 0.9050-4200-676 0.3 0.46310-JG0-322 0-2700-2470-2270-1910-162 0 1370-116 - 1070-099 17.0857-0730-0500-035 0 024 0-017 11 0896 0.804-6500 3270429 0-3500-2870-2070-215 0 1950-1620-135 - 112 -0 OS -079 -066 056 12 037 0 0259 0170-012 0-8479-7890-6250-4970-1970-31910-257 10-20 10-1870-1680-137 1120-092 0.0760-0600-0520-052 13 0 0.0270-0180-0120-008 0-87910-2230-60104690-3680-2900-22919-152 0-1630-145 116 0.061 V-0550-050 0 040 0-093 0.020 0-0110-0000-005 14 0-1700.7580-5770 442 3400-2630 2050-100 U-1410-125 -9490-044 10-020-0320-0250-015 0-009 0-0000-003 15 0-8610-7410-555 0.4170-3150-290-1830-1400-1230 0-0400-0350-001 0.025 0-0200-0110-0000-0040-002 16 0-8530-7280-534 0-940292 0 2180-1630-1230 1070-0930-0710-054 0420-032 0.0280-0230-019 D-OLS 0.008 0000-0000-002 17 0-84410-7140-5130-3710-2700-1980-1400-100 0-0930-00 0600-045 10.03410-0260-0230-0200-015 0-012 0.060-00 D-0020-001 16 2 20362-7009-12410 350 250 10-18 1w 10 ORI 969 0 0510-038 0-028 0-0210-018 0-016 0-0120-009 o-oo 0-1020-0010 Gol 19 0-828-6860-1730-331 0 232 0 1640-116 00-070 0-600-0430 031 0.023 0-0170-0140-0120-0000-0070-00 0-0020-001 20 0-8200-673 0-4560-312-2150-149-1090 0730-0610 0510-070-0260-019 0014 0-012 0-010 0.00710-0050-0020-0010-wil 21 0-811 9 660.4 1.290-19918-135.000 60.04 0-01022 10 15 0-0110-0000-0000-0000-00400020-001 22 0 2030-6470-422 0 2780-1110-123-030-0560-0460-038 0-0260-0180-0130-009 0.007 0-DOG0-0000-0000-00-001 0-295-34-4066-2670-1700 112 0-0740-049 040 01 022 0-015 0 010 0.007 0.0060-S0-0000-0020 001 - 788 622 390 0-24 -15 6-1020-06 0.001s 6-0280 019 0-0130-000-0000-0000040-0030020-001 0-780-610-375-200-146-0720-09-038 0-0900-024 0-018 0-0100-0076-0050-00-0030-0026-0010-001 9-77210-598 - 361 0-2200-1350-050-050-033 0-026 0-0210-0140-0000-0000-0000-0000-002 0.0020-001 0-9640-586 03470-207 125 0740-0470-0230 029 0-018 0-0110-07 00 0.003 0.0020-2020-0010 001 20 0.7570-5740 333 0-18 10-1160-0100120-0260-0200-014 0-0100-6060-0040-002 0.0000-002 - 00110-001 29 0-7400-5630-321-1850-107 10-060-037 -022 017601410-0000-0050-0030-002 - 002 001 0.001 0001 0-742-5520-3080-1740-09 0.0570-0330-0200-015 0-0120 0070-0040-0000-002 - 001 0-000-001 40 0-6720-4530-200 0.00-0460-022 0-0110-000-0000-0000-0010-01 50 0-6080-3720-1410-0540-0210.00900030-0010-0000-001 Page 6 of 8Step by Step Solution
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