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QUESTION ONE ( 2 5 Marks ) XYZ Corporation is considering a capital budgeting project and requires a detailed analysis. The company has provided you
QUESTION ONE Marks
XYZ Corporation is considering a capital budgeting project and requires a detailed analysis. The company has provided you
with the following financial information and ratios:
Return on Investment ROI:
Payback Period: years
Net Present Value NPV: R
Internal Rate of Return IRR:
Cash Flows:
Y e ar : R
Y e ar : R
Y e ar : R
Required:
Calculate the initial investment required for the project. Marks
Discuss the significance of each ratio in evaluating the project. Marks
Based on the given information, should XYZ Corporation undertake the project? Justify your answer.
Marks
Calculate the ARR for XYZ Corporation. Assume depreciation is calculated on the straightline
method and that the project has a scrap value of R
Marks
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