Question
Question 5 a. Given the following cash flows, for the two independent projects A and B, calculate i. Payback Period ii. Accounting rate of return
Question 5 a. Given the following cash flows, for the two independent projects A and B, calculate i. Payback Period ii. Accounting rate of return iii. Net Present Value iv. Profitability index And recommend acceptance or rejection of projects considering individual techniques of capital budgeting. A rate of 10 % has been selected for the NPV analysis.
Project A Project B Initial outlay $50,000 $100,000 Cash inflows Year 1 $10,000 $ 25,000 Year 2 15,000 25,000 Year 3 20,000 25,000 Year 4 25,000 25,000 Year 5 30,000 25,000
b. Explain the distinctive features of capital budgeting decisions.
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