investment appraisal, Financial Accounting

The business is considering two proposals for their promotions of the professional courses.Proposal one could give a stable return throughout the period. Proposal Two would give higher return only in initial years.

Proposal 1 Proposal - 2
Initial Cost (2,000,000) (2,000,000)
Cash flow Y1 350,000 2,180,000
Y2 800,000 100,000
Y3 900,000 100,000
Y4 750,000 40,000
Y5 200,000 30,000

The Marketing director thinks that the proposal with the highest Net Present Value (NPV) should be chosen where as the sales director thinks that the one with the highest internal rate of Return (IRR) should be undertaken, especially as both proposals have the same initial outlay and length of life. The company anticipates a cost of capital of 10% .
Calculate the following
• Payback period
• Net present Value
• Internal Rate of Return

What are the advantages of each method.
Posted Date: 3/19/2013 9:51:29 AM | Location : Sri Lanka

Related Discussions:- investment appraisal, Assignment Help, Ask Question on investment appraisal, Get Answer, Expert's Help, investment appraisal Discussions

Write discussion on investment appraisal
Your posts are moderated
Related Questions
what is the different between prorfit and margin prorfi

The market value of a bond is equal to: The present value of all future cash payments provided by a bond The present value of all future interest payments provided by a bond The pr

Q. What is Auditors report explain? Special Report - Special report is a term used for Auditors' reports issued in connection with various types of financial presentations, inc

Q. Explain about Financial Accounting Standards? Financial Accounting Standards - Official promulgations, also called STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS, by FINANCIAL

Brazil Corporation was organized on January 1, 1999. It is authorized to issue 20,000 shares of 6%, $50 par value preferred stock, and 500,000 shares of common stock with a par val

Pro-forma accounts under Trustee Act v\:* {behavior:url(#default#VML);} o\:* {behavior:url(#default#VML);} w\:* {behavior:url(#default#VML);} .shape {behavior:url(#def

Following the lines of the model by Ross (1977): I. Explain how firms may use their capital structure to generate a signal that conveys credible information about their future

Petition by creditor Any creditor including an assignee of a debt, may petition, provided: The debt due to him amounts to at least Shs 1,000; The debt is certain and i

what managers should know about internal rate of return (IRR) and why?