Discussing the results for the indicators

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Reference no: EM133061032

Almarai Food Company plans to make expansions, and it has the first (A) and the second (B) alternatives, and you have the following information, the discount rate (the cost of capital is 14%) and the residual value of the project at the end of its useful life is estimated at 15,000 dinars, and the facility requests an accounting rate of return on This project is 45% annually.

Required:

1. Evaluating the two alternatives and discussing the results for each of the following indicators to assist management in taking the decision to avoid the risks resulting from capital investments:

(Net present value, profitability index, accounting rate of return).

 

Company A

Company B

Years

Cash Flow

Net profit after tax

Cash Flow

Net profit after tax

0

180000

-

90000

-

1

65000

60000

12000

10000

2

75000

73000

15000

13000

3

80000

77000

20000

17000

4

50000

45000

30000

16000

5

45000

40000

14000

12000

6

30000

29000

-

-

 

Reference no: EM133061032

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