The directors of Mylo Ltd are currently considering two mutually exclusive investment
projects. Both projects are concerned with the purchase of new plant. The following data
are available for each project:
Project 1 Project 2
£000 £000
Cost
(immediate outlay)- 100 60
Expected annual
operating profit (loss):
Year 1 - 29 18
2 - (1) (2)
3 - 2 4
Estimated residual
value of the plant
after 3 years - 7 6
The business has an estimated cost of capital of 10 per cent. It uses the straight-line
method of depreciation for all non-current (fixed) assets when calculating operating profit.
Neither project would increase the working capital of the business. The business has sufficient funds to meet all investment expenditure requirements.
Required:
(a) Calculate for each project:
(i) the net present value;
(ii) the approximate internal rate of return;
(iii) the payback period.
(b) State, with reasons, which, if any, of the two investment projects the directors of Mylo Ltd should accept.
Answers
Answered by
0
Answer:
don't no bro or sister I am sorry
Answered by
15
Answer:
Managerial accounting can be used in short-term and long-term decisions involving the financial health of a company. Managerial accounting helps managers make operational decisions–intended to help increase the company's operational efficiency–while also helps in making long-term investment decisions.
Similar questions