QUESTION 5: INVESTMENT ANALYSIS
Organisation AAA is considering two mutually exclusive equipment for the next financial year. The accountant has provided you with the following information pertaining to the two equipment.
Both equipment have useful lives of 5 years. You are to use the straight line depreciation method for the equipment.
REQUIRED:
a. Identify which of the two projects has a higher Accounting rate of return (ARR). Show all workings.
b. Compute the net present value of each project at a discount rate of 12%. (use table below for your workings in calculating the NPV)
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