Solution-Calculate ARR and PP for each project

Calculate ARR and PP for each project

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Reference no: EM132426826

Question - Chang De Silva Lid, an Australian entity, is offered three projects for which the cash flows are as follows in thousands of dollars. The directors work on 14 per cent as their required rate of return (RRR). Assume all cash flows occur at the end of the relevant year. No scrap values are expected for any of the projects.

Project	Year 0	Year 1	Year 2	Year 3	Year 4	Year 5
X	-390	70	90	95	100	60
Y	-310	80	100	140	150	80
Z	-250	130	70	60	40	30

Required -

a. Calculate ARR and PP for each project.

b. Rank the projects and advise Chang De Silva which projects, if any, to accept. Give your reasons.

c. What other information would be useful to consider as part of your investment decision?

Reference no: EM132426826

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Calculate ARR and PP for each project

Reference no: EM132426826

Reference no: EM132426826

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