Ask Question, Ask an Expert


Ask Accounting Basics Expert

problem 1) Part A

Prestige Perfect Cooker Company is a manufacturer of aluminum utensils. Two new automated process machines used in the production of aluminum utensils have been introduced to the market, the MLH and the NSA. Both will give cost savings over existing processes:

                                                                                   MLH              NSA
                                                                                 Rs.000’s      Rs.000’s
Initial Cost
(Machine purchase and Installation, etc.)                        240               254
Cash flow savings:
At Time 1 (one year after the initial cash outflow)             96                 100
At Time 2                                                                      96                 100
At Time 3                                                                      96                 100
At Time 4                                                                      96                 100

All other factors remain constant and the firm has access to large amounts of capital. The required return on projects is 4%.


a) Compute IRR for MLH using trial rate of 21% and 22%.

b) Compute IRR for NSA using trial rates of 18% and 25%.

c) Based on IRR which machine would you purchase?

d) Compute NPV for each machine.

e) Based on NPV which machine would you buy?

f) In assessing capital investments, finance managers generally use three techniques – payback period or discounted payback period, IRR and NPV. Of the three, which one is most appropriate for evaluation of capital investments? What type of problems would you predict in other techniques and under what conditions would you use them?

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M96389

Have any Question? 

Related Questions in Accounting Basics

Lamp light company maintains and repairs warning lights

Lamp Light Company maintains and repairs warning lights, such as those found on radio towers and lighthouses. Lamp Light Company prepared the following end-of-period spreadsheet at December 31, 2016, the end of the fisca ...

Accounting standardsguidelines for literature

Accounting Standards Guidelines for Literature Critiques Students must submit a critique of the following academic articledeemed to be seminal to their main area of research. Details about the format, structure and asses ...

Accounting theory and current issuesassignment

ACCOUNTING THEORY AND CURRENT ISSUES ASSIGNMENT QUESTION Bio-sustainable Feeds (BSF) Ltd., an Australian bio-research firm listed on the Australian Stock Exchange (ASX), has engaged research on sustainable aqua-culture f ...

4 discussion questions - intermediate accounting 20please

4 Discussion questions - Intermediate Accounting 20 Please answer each of the 4 question compounds in at least 200 words., for an 800 word total paper. Please asnwer them individually. Thank you 1. What are the differenc ...

What is represented by the labeled lines connecting

What is represented by the labeled lines connecting entities in an REA diagram? Why are journals and ledgers not modeled in an REA diagram?

Problem - cwt lawyers pty ltd started to operate in 2015 in

Problem - CWT Lawyers Pty Ltd started to operate in 2015 in Melbourne. CWT advises clients on legal issues relating to commercial contracts, ASIC compliance, Trade Practices and Corporations Act requirements, business st ...

Titania co sells p 400000 of 12 bonds on june 1 2010 the

Titania Co. sells P 400,000 of 12% bonds on June 1, 2010. The bonds pay interest or December 1 and June 1. The due date of the bonds is June 1, 2014. The bonds yield 10% On October 1, 2011, Titania buys back P 120,000 wo ...

Obtain the 2012 10-k annual report for overland storage inc

Obtain the 2012 10-K Annual Report for Overland Storage, Inc. (OVRL). Refer to Note 1 on page F-7. Based on management's discussion in the note, what type of audit report did Overland's audit firm likely issue? In this s ...

Problemshareholders equity transactions and statement of

Problem Shareholders' Equity Transactions and statement of Financial position presentation The shareholder's equity og M. Gangoso corporation at Jan 1, 2016 appers below: *% preference share, P250 par, 15,000 shares auth ...

Dq1explain how the account of biblical creation can be

DQ1 Explain how the account of biblical creation can be viewed as a model for innovative and creative leaders when managing chaos. DQ2 Hypothesize why it is important for leaders both to create and enable chaos as well a ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate