1) A business proposal requires an investment of rupees 1 lakh and yields an income of rupees 1,60,000 after a period of 8 years, the estimated income is before depriciation of assets and after payment of taxes, calculate the payback period for the proposal?
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PBP= 1,00,000/1,60,000/8= 5 years ✊✊
2) An investment proposal requires a cash outlet of rupees 10,000 and generates cash inflows of rupees 2000, 4000, 3000 and 5000 in it's first four year of operation respectively. all cash inflows have been estimated before depreciation of assets and after payment of all taxes. calculate the payback period for the proposal?
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which is 3.2 years!!!✋
3) A company is considering taking up a project that cause rupees 5,00,000 and yields a profit of rupees 80,000/ year after considering depreciation of equipment at 12% per annum but before payment of taxes at 50% per annum, determine the payback period for the project?
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✌✌4) A manufacturing firm produces articles mostly using manual labor in order to improve the productivity the firm is considering the purchase of fully automatic equipment, there are two alternatives available in the market Machine M and Machine N, the following information is available for both alternatives?
|
In Rupees |
Initial investment |
Estimated savings
in scrap |
Estimated
savings in Direct wages |
Additional
cost of maintenance |
Additional
cost of supervision |
|
Machine M |
90,000 |
5000 |
60,000 |
8000 |
12,000 |
|
Machine N |
1,80,000 |
8000 |
80,000 |
10,000 |
18,000 |
Prepare a statement on which of the two alternatives should
the firm purchase based on the payback period?
for Machine M:
ð [5000+60,000]-[8000+12000]
ð 45,000 Rs
for Machine M
for Machine N:
ð 88,000-28,000
ð 60,000
Payback period for Machine M=90,000/45,000 => 2 years……And
Payback period for Machine N=1,80,000/60,000 =>3 years
So Machine M is suggested as it has 2 years of
Payback period but In Practical case, Machine N as alternative!
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