MBA 737 Hinson Assignment 3-2

MBA 737 Hinson Assignment 3-2 - MBA 737 Assignment 3-2...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Assignment 3-2 Graded Problems for Week 3 Jamie Hinson 10-Oct-10 1) a) Payback period Project A Project B Payback period = Base year + Balance required cash flow of the year where as Base year + 1 2 Balance required 3500 300 cash flow of the year 4000 2800 Payback period = 1.88 Years 2.11 Years Conclusion:- We should undertake the project A coz its Payback period is Less than two years b) Computation of the Net Present Value Years Cash flows A Cash flows BDisouct @ 15% PV A 0 -8500 -6400 1 ($8,500.00) 1 5000 3100 0.87 $4,347.83 2 4000 3000 0.76 $3,024.57 3 1500 2800 0.66 $986.27 Net present value ($141.32) Conclusion:- We should undertake the project B coz its NPV is More than Project B 5) a) Average Book Value = (Book Value0 + Book Value1 + Book Value2 + Book Value3 + Bo ($28,000 + $21,000 + $14,000 + $7,000 + $0) / (5 years) $14,000 Average Project Earnings = $4,500 Divide the average project earnings by the average book value of the machine to calculate the average Average Accounting Return
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/24/2010 for the course MBA 713 taught by Professor Whitmer during the Spring '10 term at Otterbein University .

Page1 / 8

MBA 737 Hinson Assignment 3-2 - MBA 737 Assignment 3-2...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online