Superb Professors

The Vivek & Co. Ltd is considering the purchase of a new machine. Two options have been suggested, each costing Rs. 400,000. Earnings after taxation but before depreciation are expected to be as follows

Year
Machine X Rs.
Machine Y Rs.

1 2 3 4 5
40,000 120,000 160,000 240,000 160,000
120,000 160,000 200,000 120,000 80,000

The Company has a target rate of return on capital @ 10% and Depreciation rate is 20% (straight line method). On this base, you are required
a)      To compare profitability of the machines and state which option you consider financially favourable
b)      Also work the Pay-back Period and
c)      ARR for each project.
 
Looking for a Similar Assignment? Order now and Get 10% Discount! Use Coupon Code “Newclient”

The post The Vivek & Co. Ltd is considering the purchase of a new machine. Two options have been suggested, each costing Rs. 400,000. Earnings after taxation but before depreciation are expected to be as follows appeared first on Superb Professors.

"Order a Custom Paper on Similar Assignment! No Plagiarism! Enjoy 20% Discount"