Calculate the accounting rate of return

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Reference no: EM131989530

SP Limited company is having two projects, requiring a capital outflow of $3,00,000 on each project.The expected annual income after depreciation but before tax is as follows:

Year	Project-A $	Project-B$
1	9,000	80,000
2	80,000	100,000
3	70,000	30,000
4	60,000	90,000
5	50,000	40,000

Depreciation may be taken as 20% of original cost and taxation at 50% of net income: You are required to calculate:

(a) Pay-back period

(b) Net present value

(d) Net present value index.

(e) Internal rate of return.

Reference no: EM131989530

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