Business Decision Making: Coursework 2

BA4008QA – Business Decision Making: Coursework 2 (Individual
Coursework)
Module Title Business Decision Making
Module Code BA4008QA
Assessment Project 2
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BA4008QA – Business Decision Making: Coursework 2 (Individual
Coursework)
TASK ONE
QUESTION 1(a) :
i. Payback for Duke
Year Cash inflow(£) C.F.(£)
1 120000 120000
2 50000 170000
3 50000 355000
4 25000 245000
5 60000 305000
6 50000 355000
cash outflow(cost of investment)
cost of investment £250000
Table of calculations
Payback Period of Duke= 4+(250000-245000)/60000= 4.0833 years
ii. Payback for Earl
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BA4008QA – Business Decision Making: Coursework 2 (Individual
Coursework)
Note: Due to the lack of proper information, this machine is not evaluated. As cost of
investment is less than the scrap of machine which is practically not justified.
iii. Accounting rate of Return for Duke
Year Cash inflow(£)
1 120000
2 50000
3 50000
4 25000
5 60000
6 50000
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BA4008QA – Business Decision Making: Coursework 2 (Individual
Coursework)
Net income 355000
Table of calculations
Accounting rate of return
(net income / initial investment)
£(355000/250000)= 1.42
iv. Accounting rate of Return for Earl
Note: Due to the lack of proper information, this machine is not evaluated. As cost of
investment is less than the scrap of machine which is practically not justified.
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