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Determine the annual cash returns

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Reference no: EM132867975

Question - The following project proposals were made available for your analysis:

 

Lke

Mathew

Sales revenue

P2,600,000

2,760,000

Cost of sales

57.5%

64.5%

Operating expenses

728,000

552,000

Depreciable assets

545,000

470,000

Economic life

5 years

6 years

Each project requires P1,200,000 initial investment

The corporation's cost of capital is 9% and the income tax rate is 30%.

Required -

a. Determine the annual cash returns?

b. Determine the payback period and the accounting rate of return.

c. Which project is superior? Should it be implemented?

Reference no: EM132867975

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