Managerial Accounting: NPV, IRR, Payback Period and Investment Decisions

Running Head: MANAGERIAL ACCOUNTING 0
MANAGERIAL ACCOUNTING

MANAGERIAL ACCOUNTING 1
Table of Contents
Question 1..................................................................................................................................2
Question 2..................................................................................................................................2
Question 3..................................................................................................................................3
Question 4..................................................................................................................................4
Question 5..................................................................................................................................4
References..................................................................................................................................6

MANAGERIAL ACCOUNTING 2
Question 1
Years Amount Factor @14%
Present
value
Working Capital Investment -100000 1 -100000
Annual Cash Flows
1 17000 0.877 14912.3
2 17000 0.769 13080.9
3 17000 0.675 11474.5
4 17000 0.592 10065.4
5 17000 0.519 8829.3
Working Capital released 100000 0.519 51936.9
Net Present Value 10299
Yes the project shall be accepted at 10299 as the NPV is positive (González, 2015).
Question 2
Machine A
Pv Factor @
10% NPV
Purchase Cost 25000 0.909 22,727
Annual Cash Flow 3500 7.61 26,621
Salvage Value 1000 0.239 239 49,588
Machine B 10% NPV
1 3500 0.909 3182
2 3500 0.826 2893
3 3500 0.751 2630
4 3500 0.683 2391
5 3500 0.621 2173
6 3500 0.564 1976