please solve it as soon as possible and make sure point e have stepper answer....
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please solve it as soon as possible and make sure point e have stepper answer. thank you
A company is considering a capital investment proposal where two alternatives involving differing degrees of mechanisation, are being considered. Both investments would have a five-year life. In Option 1 new machinery would cost 278,000, and in Option 2 805,000. Anticipated scrap values after 5 years are 28,000 and 150,000 respectively. Depreciation is provided on a straight line basis. Option I would generate annual cash inflows of 100,000, and Option 2, 250,000. The cost of capital is 15%. Required: (a) Calculate for each option: (1) the payback period (ii) the accounting rate of return, based on average book value (iii) the net present value (iv) the internal rate of return
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