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21 May 2021
(15 Marks) The Mayfair Corporation is deciding to choose any one of the projects out of the following mutually exclusive design projects. The cash flows of both the projects are given below
Year
Particular
Project A
Project B
0
Cost of Project
(50,000)
(14,000)
0
Licensing Cost
(15,000)
(10,000)
1
Cash Inflow
24,000
8,000
2
Cash Inflow
29,000
14,500
3
Cash Inflow
36,000
12,800
- If the required rate of return is 11% per annum and the Mayfair Corporation applies the Discounted Payback Period technique of capital budgeting then which project should the company accept?
- If Mayfair Corporation applies the Payback Period Technique of capital budgeting then which project should the company accept?
- Explain the reason(s) for the difference in your answers in (a) & (b).
(15 Marks) The Mayfair Corporation is deciding to choose any one of the projects out of the following mutually exclusive design projects. The cash flows of both the projects are given below
Year
Particular
Project A
Project B
0
Cost of Project
(50,000)
(14,000)
0
Licensing Cost
(15,000)
(10,000)
1
Cash Inflow
24,000
8,000
2
Cash Inflow
29,000
14,500
3
Cash Inflow
36,000
12,800
- If the required rate of return is 11% per annum and the Mayfair Corporation applies the Discounted Payback Period technique of capital budgeting then which project should the company accept?
- If Mayfair Corporation applies the Payback Period Technique of capital budgeting then which project should the company accept?
- Explain the reason(s) for the difference in your answers in (a) & (b).
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Joshua StredderLv10
21 May 2021