Calculate the payback and discounted payback period, Cost Accounting

Lapsol limited manufacture electrical appliances for the export market. The management of the company are considering investing in one of two possible capital expenditure projects. Due to financial constraints, only one of the projects can be accepted. You are presented with the following information in relation to the projects:

1831_financial constraints.png

Notes:

1) working capital for each project will be required from the outset and will be recovered at the end of the project's life;

2) An IDA grant, equal to 15% of the cost of the asset, will be received at the end of year 1. The IDA grant has not been included in the projected net cash receipts.

3) The company's cost of capital is 12%;

4) The company has already spent €150,000 in consulting fees on this capital investment project.

Required:

(a) Caculate the following in respect of both projects:

Payback period

Discounted payback period

Net Present Value

Internal Rate of return

(b) Assess each project, stating your opinion and which project, if any, should be accepted.

Posted Date: 2/19/2013 2:02:10 AM | Location : United States







Related Discussions:- Calculate the payback and discounted payback period, Assignment Help, Ask Question on Calculate the payback and discounted payback period, Get Answer, Expert's Help, Calculate the payback and discounted payback period Discussions

Write discussion on Calculate the payback and discounted payback period
Your posts are moderated
Related Questions
Types of Overhead Absorption Rate NB: Overheads incurred are generally absorbed on the basis of budgeted or estimated figures. The given basis may be applied leading to the

Identify and explain many classification of costs for planning, control, performance evaluation and decision making.

Determine the Joint Cost A company produces three products, Y1, Y2, and Y3 in the similar process.  The data below reflects average monthly results as:

1) The Svelte Jeans Company produces two different types of jeans. One is called the "Simple Life" and the other is called the "Fancy Life". The company sales budget estimates that

The profit volume ratio of xltd. is 50% and the margin of safety is 40%.you are required to calculate the net profit if sales volume is rs.100,000?

A local government authority owns and operates a leisure centre with numerous sporting facilities, residential accommodation, a cafeteria and a sports shop. The summer season lasts

Cost Behaviour "Profitability is only around the corner." This is a general expression in the business world; you might have heard or said this yourself only. But, the reality

Kaplan Computers manufactures high end computer systems for the graphics design industry. At the present time, the company makes three computers with the following characteristics

Discuss how SD can use standard costing and variance analysis to prepare meaningful reports when using Kaizen Costing. By the use of standard costing and variance analysis, fr

Relationship between Cost Accounting and Business Enterprise Cost accounting, like will be mentioned later to adopts a cost center approach to accounting for costs. A cost cen