Question
VWY Inc. is considering two mutually exclusive investments. The company's cost of capital is 12% and the tax rate is 25%. Details are given below:
VWY Inc. is considering two mutually exclusive investments. The company's cost of capital is 12% and the tax rate is 25%. Details are given below:
Particulars | Investment G | Investment H |
Cost of investment | 18,00,000 | 20,00,000 |
Expected life | 5 years | 5 years |
Annual Income (before Tax & Depreciation) | 5,25,000 | 6,25,000 |
Depreciation is charged on a straight-line basis. You are required to calculate: a. Discounted payback period b. NPV c. Profitability index
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Management and Cost Accounting
Authors: Colin Drury
8th edition
978-1408041802, 1408041804, 978-1408048566, 1408048566, 978-1408093887
