The capital budgeting analysis was completed by a company Chief Financial Officer (CFO) for the following project. Answer the questions below.

Question A Capital Budgeting (15 marks! The capital budgeting analysis was completed by a company Chief Financial Ofcer (CFO) for the following project. Answer the questions below. Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Cumulative Income Statement: Sales 550,000 516,670 350,000 300,000 250,000 Cost of Goods Sold 165,000 155,001 105,000 90,000 75,000 Gross Profit 335,000 361,669 245,000 210,000 175,000 Fixed Expenses {excluded Depreciation] [165,000] [155,001] {105,000} (90,000} {75,000} Depreciation 100,000 1013,000 100,000 100,000 100,000 Earnings Before Interest and Taxes [EBIT] 120,000 106,668 40,000 20,000 Taxes 30,000 26,668 10,000 5,000 Net Income 90,000 80,000 30,000 15,000 cash Flaws: EBIT 120,000 106,668 40,000 20,000 Add Depreciation 100,000 1013,000 100,000 100,000 100,000 Subtract Taxes 30,000 26,668 10,000 5,000 Operating Cash Flows 190,000 180,000 130,000 115,000 100,000 Assets Purchases: Proposed Investment in Equipment Investment in Inventories , 20,000 Residual Vakue of Equipment after Tax 50,000 Total Cash Flows , 190,000 180,000 130,000 115,000 170,000 Discount Factor at 10% . 0.909 0.326 0.751 0.683 0.621 Present Values , 172,710 143,680 97,630 78,545 105,570 Questions - Calculate or answer the following: 1. Accounting average return? Average accounting rate of return = Average Income [Average Investment * 100 . Payback period? . Net present value? . Is the project internal rate of return of 16.5% considered good or bad, why? . The protability index for the project? . The return on sales for each year (ROS). Calculate the average return on sales for the ve years. The ROS statistic is used for which type of responsibility centre? 0301-th 7. The company set goals for the accounting average return of 20%, payback period of 5 years, return on sales of 10% and required investment return of 10%. Would you accept or reject the project and why