EduLearn Pvt. Ltd. is considering three educational software packages for purchase. The details are as follows....
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- EduLearn Pvt. Ltd. is considering three educational software packages for purchase. The details are as follows. Assume a tax rate of 29% and an interest on capital of 10%.
Particulars | Package A (?) | Package B (?) | Package C (?) |
Initial investment | 5,50,000 | 4,80,000 | 6,20,000 |
Estimated annual sales | 7,50,000 | 7,00,000 | 8,00,000 |
Cost of production: | |||
Direct material | 60,000 | 50,000 | 70,000 |
Direct labour | 70,000 | 60,000 | 80,000 |
Factory overhead | 80,000 | 70,000 | 90,000 |
Administration cost | 35,000 | 30,000 | 40,000 |
Selling & Distribution cost | 25,000 | 20,000 | 30,000 |
- The economic life of Package A is 2 years, while it is 3 years for the other two. The scrap values are ?60,000, ?50,000, and ?40,000 respectively. Determine the best investment based on the payback period method.
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