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Assignment on Accounting for Business Doc

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Added on  2020-07-22

Assignment on Accounting for Business Doc

   Added on 2020-07-22

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Accounting for Business
Assignment on Accounting for Business Doc_1
Table of ContentsQUESTION 1..................................................................................................................................1QUESTION 2..................................................................................................................................2QUESTION 3..................................................................................................................................3QUESTION 4..................................................................................................................................4QUESTION 5..................................................................................................................................4REFERENCES................................................................................................................................6Index of TablesYTable 1 Calculation of cash inflows................................................................................................1Table 2 Calculation of payback period............................................................................................1Table 3 Calculation of net present value.........................................................................................1Table 4 Calculation of accounting rate of return.............................................................................2Table 5 Sales budget........................................................................................................................3Table 6 Labor budget.......................................................................................................................3Table 7 Cash Flow Budget..............................................................................................................3
Assignment on Accounting for Business Doc_2
QUESTION 1Delcom Chemical has an investment opportunity to purchase a new business; itsquantitative analysis through capital budgeting method is performed as follows:Table Calculation of cash inflowsYear Profit Depreciation Cash inflow 1 $ 200,000.00 $ 160,000.00 $ 360,000.00 2 $ 210,000.00 $ 160,000.00 $ 370,000.00 3 $ 300,000.00 $ 160,000.00 $ 460,000.00 4 $ 320,000.00 $ 160,000.00 $ 480,000.00 5 $ 340,000.00 $ 160,000.00 $ 500,000.00 $ 1,370,000.00 $ 800,000.00 $ 2,170,000.00 Table Calculation of payback periodYear Cash flow Cumulative cash flows 1 $ 360,000.00 $ 360,000.00 2 $ 370,000.00 $ 730,000.00 3 $ 460,000.00 $ 1,190,000.00 4 $ 480,000.00 $ 1,670,000.00 5 $ 500,000.00 $ 2,170,000.00 Paybackperiod=2year+($800,000$730,000)/$460,000¿2year2monthsTable Calculation of net present valueYear Cash flow Discounting factor@13%Discounted cash flows 1 $ 360,000.00 0.8850 $ 318,584.07 2 $ 370,000.00 0.7831 $ 289,764.27 3 $ 460,000.00 0.6931 $ 318,803.07 4 $ 480,000.00 0.6133 $ 294,392.99 5 $ 500,000.00 0.5428 $ 271,379.97 Total cash inflows $ 1,492,924.38 Less: Initial investment $ 800,000.00 Net present value $ 692,924.38 | Page
Assignment on Accounting for Business Doc_3

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