Is the investment justified

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Reference no: EM131989574

A special effects process can be carried out by using a machine which can be acquired for Php450,000. The sources for these funds are as follows:

Source

Amount

Cost

Short Term Stocks

Php 270,000

0.15

Common Stocks

Php 90,000

0.20

Marketable Securities

Php 90,000

0.05

Other data of the investment are as follows:

Life = 10 years

Value at end-of-life: Php 50,000

Annual Receipts = Php 150,000

Annual Disbursements = Php 60,000

Reinvestment Rate of Return = 13%

Is the investment justified? Use the following methods in testing its acceptability:

a. PW/NPV

b. AW

c. FW

d. IRR

e. ERR

f. ERRR

g. Simple payback when desired payback period is 4.5 years

h. Discounted payback

Reference no: EM131989574

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