Fit for Life, a full-service fitness center has accumulated $135,000 for capital expenditures during theu...
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Fit for Life, a full-service fitness center has accumulated $135,000 for capital expenditures during theu year. The accounting manager has received five proposals from various department heads. The company has a 30% tax rate. The following guidelines have been established to evaluate the proposals and determine which will be funded. (Any time you see XXX, use the last three digits of your student ID. Write them here 223 pcoming To be funded, a project should have a payback period of 5 years or less, but if everything else looks good, we might consider it. Projects must have a cash return no less than the company's Required Rate of Return of 596. . All projects having a positive NPV (computed before tax) will be further evaluated using the Internal Rate of Return (Simple Rate of Return). The accounting rate of return is computed using after tax income. The cost of the asset is averaged over the asset's useful life. All depreciation is straight-line over the asset's useful life. The project(s) with the highest profitability ratios will be selected for funding. The organization will fund as many projects as possible; however, if the allotment of funds is not depleted, . the balance will be carried over to the following year
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