Swan plc. is considering two investment projects whose cash flows are shown below: Points in time (yearly interval) 0 1
Posted: Wed May 18, 2022 10:01 pm
Swan plc. is considering two investment projects whose cash
flows are shown below:
Points in time (yearly interval) 0 1 2 3 4
Project A (£) -60,000 30,000
22,500 21,000 9,000
Project B (£) -60,000 7,500 22,500
27,500 30,000
The company’s required rate of return is 15% and two projects
are mututally exclusive.
(a) Use the sample payback method to advise the company which
project should be taken (if any). Assuming the threshold figure is
set to be 3 years.
flows are shown below:
Points in time (yearly interval) 0 1 2 3 4
Project A (£) -60,000 30,000
22,500 21,000 9,000
Project B (£) -60,000 7,500 22,500
27,500 30,000
The company’s required rate of return is 15% and two projects
are mututally exclusive.
(a) Use the sample payback method to advise the company which
project should be taken (if any). Assuming the threshold figure is
set to be 3 years.