Question

3.1 Consider two projects whose cash inflows are not even. Assume that the project costs R205,000. The net cash inflows for each year are as follows: Year Project X Project Y 1 R30,000.00 R75,000.00 2 R35,000.00 R95,000.00 3 R65,000.00 R60,000.00 4 R55,000.00 R26,000.00 5 R75,000.00 6 R95,000.00 REQUIRED 3.1.1 Calculate the payback period of each project and recommend the project that should be selected based on the payback period. (6 Marks)

Name: 31 consider two projects whose cash inflows are not even assume that the project costs r205000 the net cash inflows for each year are as follows year project x project y 1 r3000000 r7500000 67575
Uploaded: 2023-08-19T11:05:59-08:00
Duration: 3 min 44 s
Channel: Rashmi Sinha
Description: 31 consider two projects whose cash inflows are not even assume that the project costs r205000 the net cash inflows for each year are as follows year project x project y 1 r3000000 r7500000 67575

          3.1 Consider two projects whose cash inflows are not even. Assume that the project costs R205,000. The net cash inflows for each year are as follows:

Year Project X Project Y
1 R30,000.00 R75,000.00
2 R35,000.00 R95,000.00
3 R65,000.00 R60,000.00
4 R55,000.00 R26,000.00
5 R75,000.00
6 R95,000.00

REQUIRED
3.1.1 Calculate the payback period of each project and recommend the project that should be selected based on the payback period. (6 Marks)

Added by Gema A.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

Instant Answer

Solved by Expert Rashmi Sinha

08/19/2023

Step 1

For Project X: Year 1: R30,000.00 Year 2: R30,000.00 + R35,000.00 = R65,000.00 Year 3: R65,000.00 + R65,000.00 = R130,000.00 Year 4: R130,000.00 + R55,000.00 = R185,000.00 Year 5: R185,000.00 + R75,000.00 = R260,000.00 Year 6: R260,000.00 + R95,000.00 = Show more…

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3.1 Consider two projects whose cash inflows are not even. Assume that the project costs R205,000. The net cash inflows for each year are as follows: Year Project X Project Y 1 R30,000.00 R75,000.00 2 R35,000.00 R95,000.00 3 R65,000.00 R60,000.00 4 R55,000.00 R26,000.00 5 R75,000.00 6 R95,000.00 REQUIRED 3.1.1 Calculate the payback period of each project and recommend the project that should be selected based on the payback period. (6 Marks)