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
Q. A ltd. Company has equity share capital of Rs. 5,00,000 divided into shares of Rs. 100 each. It wishes to gain further Rs. 3,00,000 for expansion cum modernization plans. The co

are the notes to the financial statements part of the financial reporting

A net loss resluts in a decrease in: a. Revenues b. Expenses c. Stockholder's Equity d. Liabilities

Illustration: Holding company with direct share holding Rain Ltd., Storm Ltd. and Thunder Ltd. are in the business of manufacturing tents. Their balance sheets as at 30 September

Problem 1 (28 marks) Pre-Contribution Balance Sheets and Fair Values June 30, 20X9 (in thousands of $) Swag Co. Perk Ltd. Pre- Contribution Fair Value Pre- Contributi

Q. What is Demands For Grants? The budget proposals of the expenditures to be met out from the "Consolidated fund of India" should be presented in the form of Demands for Grant

I need help with assignment completeion

Seattle Health Plans currently uses zero debt financing.  Its operating income (EBIT) $1 million, and it pays taxes at a 40 percent rate.  It has $5 million in assests and because

The costs that follow were extracted from the accounting records of various different manufacturers: 1.    Weekly wages of an equipment maintenance worker 2.    Marketing costs

You would like to start investing in the bond markets and your investment horizon is two years.  In view of the current extremely low interest rate environment, you expect the U.S.