CAPITAL INVESTMENT DECISIONS

HideShow resource information

1. Investment in new machinery - cash flow graph (Should investment be taken)

  • Years (Horizontal); Vertical - Capital expenditure; Savings; Disposal; Net cash flow; Discount factor; Present value = Net presnt value
  • Years (Vertical); Horizontal - Capital expenditure; Savings; Disposal; Net cash flow; Discount factor; Present value = Net presnt value
1 of 14

Other questions in this quiz

2. Payback period (PP) graph - Headings down the vertical axis

  • Years: 0, 1, 2, 3, 4,
  • Year; Cash flow; Cumulative cash flow

3. Accounting Rate of Return (ARR) =

  • Total cost of unit x replacement number
  • Total annual profit / Average annual investment x 100
  • Net profit per unit x replacement number
  • Total anual profit x life time until replacement (yrs) / life time until replacement (yrs)

4. Present Value (PV) =

  • Cash Flow x Discount Factor (DF)
  • Discount Factor (DF) / Cash Flow
  • Discount Factor (DF) x Cash Flow
  • Discount Factor (DF) - Cash Flow

5. Average annual profit =

  • Total anual profit x life time until replacement (yrs) / life time until replacement (yrs)
  • Investment cost + total disposal value / 2
  • Total annual profit / Average annual investment x 100
  • Net profit per unit x replacement number
  • Total cost of unit x replacement number

Comments

No comments have yet been made

Similar Accounting resources:

See all Accounting resources »See all CAPITAL INVESTMENT DECISIONS resources »