User Account

All Pages

Which project should be selected for expansion plan

Assignment Help Financial Accounting
Reference no: EM132977069

Claremont Building Ltd is considering two projects for its expansion plan - project A and project B. Both projects would run for a duration of five years. Project A requires an initial investment of $300,000 while Project B needs $420,000 initial investment. After analysing the estimated cash flows and the cost of capital (of 12%), the following information is available for further decision-making process:

                                      ProjectA                Project B
NPV                         $60,917.11            $64,431.80
IRR                               21.95%                17.07%
Payback period                2.30 years          3.56 years

Problem A - If both projects are independent, which project (s) should be selected for the investment? Why?

Problem B - If project A and project B are mutually exclusive and Claremont Building Ltd has not constraint on funding, which project should be selected for expansion plan? Why?

Problem C - If the company has an issue in managing its liquidity, which project should be preferred based on provided information? Why?

Reference no: EM132977069

Questions Cloud

How much do need to pay every month : How much do you need to pay every month? You are granted a personal car loan for the total borrowing amount of $20,000 over 5 years.
What the depreciation expense : MNO will adopt this practice. On the consolidated statement of financial position at December 31, 2021, what the depreciation expense
Explain pt ayah accounting treatment bove : PT Ayah bought 15% of the outstanding shares of PT Sandang. Explain PT Ayah's accounting treatment for each of the above investments based on ifrs.
Prepare the appropriate adjusting journal entry : Prepare the appropriate adjusting journal entry(s) that Intention Incorporated would make on May 31, 2013 to account for the delivery
Which project should be selected for expansion plan : If project A and project B are mutually exclusive and Claremont Building Ltd has not constraint on funding, which project should be selected for expansion plan?
Objective of the performance plan : Objective of the performance plan is to focus on the organisations key goals and objectives in line with ‘Service standards statement' available in the toolbox.
What will be the increase in operating cash flow : What will be the increase in operating cash flow if quantity sold increase by 5%when the firm's degree of operating leverage is 5.5? Provide calculation.
Prepare a brief employee performance review : Prepare a brief employee performance review of yourself in a current or previous workplace - evaluate your own behaviour and performance against these standards
Find what is the contribution margin per unit : A firm with fixed costs of $12,000. The sales price is $5.50 per unit, while the variable costs per unit $2.30. What is the contribution margin per unit?

Reviews

Write a Review

Financial Accounting Questions & Answers

  Limitations and criticisms of positive accounting theory

Discuss the limitations and criticisms of Positive Accounting Theory. In your answer, you should clearly indicate whether or not you agree with these perceived shortcomings of PAT and why.

  How to make journal entries to record each of the warranty

How to Make journal entries to record each of the warranty work completed during the month, includingrelated revenue

  Calculate the proceeds from assumed exercise of options

The fair market value of Teal's common shares was $9.00 per share throughout fiscal 2021. Calculate the proceeds from assumed exercise of options

  What was the variable overhead rate variance for the month

Millonzi Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company has provided the following data for the most recent month: What was the variable overhead..

  Calculation of the total annual inventory costs

Calculation of the total annual inventory costs? Calculation of the number of orders to be placed? Calculation of the Economic Order Quantity?

  Determine the total liabilities at the end of years 2 and 1

Determine the total liabilities at the end of Years 2 and 1.- Determine the ratio of liabilities to stockholders' equity for Year 2 and Year 1.

  Prepare cash budget for the first quarter

Pink Martini wants to maintain a balance of at least $27,000 cash at the end of each quarter. Prepare cash budget for the first quarter

  What is payback period and payback reciprocal

The XYZ Corporation contemplates the replacement. The book value of the old machinery is zero. What is payback period and payback reciprocal?

  Make investment decisions using a speculative intent

Based on the agency theory perspective, whose interests served when healthcare administrators make investment decisions using a speculative intent?

  Calculate the present value of the note

Calculate the present value of the note and present a loan amortization table. AAA follows IFRS and therefore uses the effective interest method

  What will be the distribution of income to Eba

Partners Adan and Eba have capital balances in a partnership of P400,000 and P600,000, What will be the distribution of income to Eba

  Prepare the journal entries necessary to correct books

Prepare the journal entries necessary in 2010 to correct the books for the following items, assuming that the books have not been closed. Disregard effects of corrections on income tax.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd