there are presently (2) projects available toshrewsberry limited,however the company only has cash available ofone of them.
ProjectR. Project S
investment.900000. 600000
Depreciation straight line straight line
cost of capital14%. 14%
lifespan. 5years. 5 years
residual 84000. nil
netprofit.
year1. 56000. 7000
year2 80000 7000
year3 102000. 7000
year4. 130000 7000
year5. 152000 7000
required:
1.1 calculate the accounting rate of return for project R.
1.2 Calculate the payback period for both projects.
1.3 calculate the net present value for both projects
1.4 which project should the company choose and why?
