Q2 Calculations 0.0 / 5 ? Business ManagementAccountingUniversityNone Created by: ChrisB98Created on: 11-05-19 16:32 ARR Average profit/ average investment x 100 = % 1 of 7 Average profit Add all the years up, using depreciation then divide by amount of years 2 of 7 Average investment Initial cost + residual value /2 3 of 7 Payback Period Take off depreciation then find out where the initial investment is paid back = years 4 of 7 Net Present Value Times discount factor by discounted project. Use the residual value too. Total discounted is NPV =£ 5 of 7 What is IRR Same as NPV but with higher discount factor = % 6 of 7 IRR calculation A% + (NPV at A%/ NPV at A% - NPV at B%) x (B%- A%) = % 7 of 7
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