Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

SCOFIELD Corporation purchased a P3,000,000 equipment. In view of this investment, working capital is expected to increase by P 750,000. Cash inflows are expected to

SCOFIELD Corporation purchased a P3,000,000 equipment. In view of this investment, working capital is expected to increase by P 750,000. Cash inflows are expected to average P900,000 before tax over the next ten years. The company is subject to a 30% income tax. The company's cut-off rate of return is at 15%.

The PV of an annuity of P1 at the end of 10 years at: 13%- 5.426 14%-5.216 15%- 5.019 16%-4.833. 17%- 4.659 18%- 4.494 The PV value of P1 at the end of 10 years at: 13%- 0.295 14%- 0.270 15%- 0.247 16%- 0.227 17%- 0.208 18%- 0.191 REQUIREMENTS: What is the company's accounting rate of return based on average investment? What is the payback period? What is the net present value? What is the approximate discounted rate of return?

Step by Step Solution

3.48 Rating (151 Votes )

There are 3 Steps involved in it

Step: 1

To solve this problem we need to calculate the following 1 Accounting Rate of Return ARR based on av... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals of Financial Management

Authors: Eugene F. Brigham, Joel F. Houston

12th edition

978-0324597714, 324597711, 324597703, 978-8131518571, 8131518574, 978-0324597707

More Books

Students also viewed these Accounting questions

Question

What is meant by a throwaway prototype?

Answered: 1 week ago