question archive Name) Date) Score: Program-Year-Section Professor: Exercise II Set A Henry Corporation is taking into consideration on expanding its operation
Name) Date) Score: Program-Year-Section Professor: Exercise II Set A Henry Corporation is taking into consideration on expanding its operation
Subject:AccountingPrice: Bought3
Name) Date) Score: Program-Year-Section Professor: Exercise II Set A Henry Corporation is taking into consideration on expanding its operation. The expansion needs new computerized equipments which last for five years. A cash outflow of P2,000,000.00 is necessary for the procurement of new equipments. The prevailing bank's interest rate for a 5 year term loan is 7% per annum. The projected cash inflows from the investment for the next five years are given below: Year 1 2 Cash Flow P1,000,000.00 800,000.00 600,000.00 400,000.00 200,000.00 3 4 5 Required: By applying the following evaluation techniques, is the new investment economically acceptable? 1. Payback period 2. Discounted Payback 3. Net Present Value (NPV) 4. Profitability Index (PI) 5. Internal Rate of Return (if financial calculator is available) 6. Modified Internal Rate of Return (if financial calculator is available)
