METHODS THAT CONSIDER TIME VALUE OF MONEY Two investment proposals have been made and the following data thereon are given: Project ALPHA Project...
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METHODS THAT CONSIDER TIME VALUE OF MONEY

Two investment proposals have been made and the following data thereon are given:

Project ALPHA Project BETA

Investment P123,417 P155,934

Depreciable assets included in the investment figure 60,000 72,000

Economic life 8 years 12 years

Annual sales revenue P65,000 P78,000

Annual out-of-pocket operating cost 36,000 42,500


Income tax rate 35%

Cost of capital 10%

Determine which proposal is the better one based on:

a.   Internal rate of return

b.   Net present value

c.   Profitability index

d.   Discounted payback period

Answered by Expert Tutors

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