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Business Decision Making and Financial Analysis of TESCO Plc

   

Added on  2023-06-18

11 Pages2109 Words318 Views
Business Decision Making

TABLE OF CONTENTS
TASK ONE......................................................................................................................................3
Question 1(a)...............................................................................................................................3
Question 1(b)...............................................................................................................................5
Question 1(c)...............................................................................................................................7
TASK TWO.....................................................................................................................................7
Question 2(a)...............................................................................................................................7
Question 2(b)...............................................................................................................................8
Question 2(c)...............................................................................................................................9
REFERENCES..............................................................................................................................10

TASK ONE
Question 1(a)
1. Payback Period
Project Manchester
Years Cash Flows Cumulative Cash Flow
1 10000 10000
2 50000 60000
3 50000 110000
4 80000 190000
40000
0.5
Payback Period 3.5 years
Project London
Years Cash Flows Cumulative Cash Flow
1 95000 95000
2 25000 120000
3 20000 140000
4 50000 190000
40000
0.8
Payback Period 3.8 years
2. Accounting rate of return
Project Manchester
Years Cash Flows
1 10000
2 50000
3 50000
4 80000

Estimated Life 4
Initial Investment 150000
Scrap Value 10000
Average investment 80000
Average Annual Net Earnings 47500
Average Rate Of Return 59.4
Project London
Years Cash Flows
1 95000
2 25000
3 20000
4 50000
Estimated Life 4
Initial Investment 180000
Scrap Value 40000
Average investment 110000
Average Annual Net Earnings 47500
Average Rate Of Return 43.2
3. Net Present Value
Project Manchester
Years Cash Flows PV Factor Discounted Cash Flow
1 10000 0.92 9174.31
2 50000 0.84 42084
3 50000 0.77 38609.17
4 80000 0.71 56674.02
Total 146541.5
Initial
Investment 150000

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