Payback is the amount of time it takes to pay back the original investment

 

initial investment profit net cash flow working out that thingy

now (80,000) 0 (80,000)

1 0 25,000 25,000 55,000

2 0 25,000 25,000 20,000

3 0 25,000 25,000 in here somewhere

4 0 25,000 25,000

5 0 25,000 25,000

 

so 5,000 in the third year

 

25,000 divided by 12=2083.33

 

so 5000 divided by 2083.33= 2.4

 

therefore it will take 3 years ad 2.4 months to pay back

 

 

ARR is the average annual profits made expressed as a pecentage of the initial investment

 

arr= average annual profit divided by initial investment x 100

 

the initial investment= (80,000)

 

the yearly profit=25,000 x 5 over 5 years innit which equals 125,000

 

125,000-80,000= 45,000

 

45,000 is divided by 5 which is the 5 years

 

=9,000

 

so 9000 divided by 80,000 the initial investment x 100= 11.25%

 

whether this is a good enough percentage is debatable because the interest rate is 5.5% so they'd earn less than 6% interest

 

whether this is worth it should be identified

 

 

 

Net present value is when the initial investment is paid now but whether the returns on the investment in the future is looked at

 

net cash flow discount rates discounted cash flow

now (70,000) 1 (70,000)

1 7,500 0.91 6,825 (discount rate times net cash)

2 11,250 0.83 9337.5

3 15,000 0.75 11,250

4 15,000 0.68 10,200

5 27,000 0.62 16,740

 

 

6,825+9337.5+11250+10,200+16,740 -70,000

 

=(15,647.5)

 

therefore a poor investment

 

if anyone actually reads this please don't question the net present value figures and where they came from

This is your worst spam yet!!:rolleyes:

I beg to differ with the facts presented by Nat.

I beg to differ with the facts presented by Nat.

 

Please don't encourage her......................... :(

it wasn't even a copy and paste job, it was a form of revision

 

i have a business studies exam on thursday and the first 1 and half hours is based on balance sheets/profit and loss accounts

 

that sort of thing

it wasn't even a copy and paste job, it was a form of revision

 

i have a business studies exam on thursday and the first 1 and half hours is based on balance sheets/profit and loss accounts

 

that sort of thing

 

Maybe, but did you really need to post it?:confused:

I wonder how many exams have been flunked over the years because students have been addicted to this place :o

but well yeh?

 

why not

 

it's causing riveting discussion

 

anyone who wants to help me revise is welcome to

 

as long as they know this stuff

 

ha ha to bum person

I wonder how many exams have been flunked over the years because students have been addicted to this place :o

 

Sounds like a topic for the Lounge to me.;)

^ done.

ha it's not very successful though at the moment

I love the smell of accounts in the evening.

 

Capital Investment Appraisal :heart:

Selling holidays used to be easy, thought Isabel Bromage......

Selling holidays used to be easy, thought Isabel Bromage......

 

You sure it wasn't Thomas Cook?:rolleyes:

It's the first line from my Business Exam Case Study :P

It's the first line from my Business Exam Case Study :P

 

Is she married to a guy named Albion??:rolleyes:

i was looking at some unit 4 papers today for business studies

 

one was on a construction company

 

the other

 

p and o cruises

 

fun stuff

 

good times

i think we were studying something like that at maths class.

 

G=Go+n×p/100

 

 

or sth like that.. :uhoh:

When I did my accounting exams last year, all the company names were made up, as was the given data.

 

Using the given data, prepare the period-end accounts for Joe Bloggs ltd.

When I did my accounting exams last year, all the company names were made up, as was the given data.

 

Using the given data, prepare the period-end accounts for Joe Bloggs ltd.

 

But Joe Bloggs happens to be a real company!!:P

O Really?

i actually had to use this today

I need an aspirin... :confused:

I always sucked at maths/economy

O Really?

 

O'Reilly?:rolleyes:

:laugh3: