TEACHERS FEEDBACK Both oral and written feedback will be pro

TEACHER\'S FEEDBACK Both oral and written feedback will be provided. Written wil provided on the submitted assessments PROBLEMS 1-Explain the investment criteria for both NPV and IRR Discuss the advantages and disadvantage of NPV and IRR 2-Rural poultry farm costs 5,000,000 to set up and has a scrap value of 1,000,000. Its stream of income before depreciation and taxes during the first five years is 1,000,000, ,200,000 1,400,000, 1,600,000 and 2,000,000. If depreciation is 800000 and tax rate is 50%, calculate the accounting rate of return (ARR) 3-Company C is planning to execute a project requiring initial investment of $105 million. The project is expected to generate $25 milion per year for 7 years. Calculate the payback period of the project. Company C is planning to undertake another project requiring initial investment of S50 million and is expected to generate $10 million in Year 1, $13 million in Year 2, S16 million in year 3, S19 million in Year 4 project. Using payback period, determine which is a better investment, computation and explain the limitations of using payback period. 4- plant and machinery investment with cost of S8,320 thousand cash inflows will be $3,4, S4,070, S5,824 and S2,065 at the four years project life. At the end of the project ,the machinery will be sold for $900 what will be the net present value of the project if the discount rate is 18%.?

Solution

IRR: Internal rate of return (IRR) for an investment is the percentage rate earned on each dollar invested for each period it is invested. IRR is also another term people use for interest.

NPV: Net present value (NPV) is an investment measure that tells an investor whether the investment is achieving a target yield at a given initial investment.

ADVANTAGES OF NPV

DISADVANTAGES OF NPV

ADVANTAGES AND DISADVANTAGES OF IRR

ADVANTAGES OF IRR

DISADVANTAGES OF IRR