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ashly138 ashly138
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6 years ago
Hiroshi Inc. is evaluating 3 investment alternatives. Each alternative requires an initial investment cash outflow of $176,000 and is to be depreciated on a straight-line basis ($6,000 salvage value). Ignore income taxes. Cash flows for the various investments are summarized below:

   Project A   Project B   Project C
Year 1   $87,000   $52,600   $0
Year 2   $78,000   $52,600   $0
Year 3   $65,000   $52,600   $89,000
Year 4   $4,000   $52,600   $97,000
Year 5   $2,000   $52,600   $109,000

The company has a required rate of return of 11.2%

Required:
a.   rank each alternative based on NPV
b.   rank each alternative based on IRR   
c.   rank each alternative based on accrual accounting rate of return using average annual cash flows
d.   evaluate each project based on the payback periods
Textbook 
Cost Accounting: A Managerial Emphasis, Canadian Edition

Cost Accounting: A Managerial Emphasis, Canadian Edition


Edition: 7th
Authors:
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btpsandbtpsand
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4 years ago
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