| Investment Appraisal - Exercise 3.15 | Unnamed: 1 | Unnamed: 2 | Unnamed: 3 | Unnamed: 4 | SOLUTION |
|---|---|---|---|---|---|
| ARR Using the Original Equity Expenditure Method: | |||||
| Average Profit | x 100 | ||||
| Original Equity Expenditure | |||||
| Project | £15.6 / 4 Years | x 100 | |||
| 30 | |||||
| 0.13 | |||||
| Using the Payback Method: | |||||
| Project | Year | Net Cash Inflows | Cumulative Net Cash Inflows | ||
| 1 | 9.6 | 9.6 | |||
| 2 | 10.8 | 20.4 | |||
| 3 | 10.8 | 31.2 | |||
| 4 | 7.2 | 38.4 | |||
| Payback Period = | 2 years + (9.6 / 10.8) x 365 days | ||||
| 2 years 324 days |