Solution
Aarti J answered on
Jul 07 2020
Cover Sheet
FNSACC501 –
Provide financial and business
performance information Workplace simulation
Student Details
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Question Unit of competency Topic Possible Mark
1 FNSACC501/1,2,3 Accounting Rate of Return 16
2 FNSACC501/1, 2, 3 Payback 10
3 FNSACC501/1, 2, 3 Investment Appraisal 33
4 FNSACC501/1, 2, 3 Ratio Analysis 10
5 FNSACC501/1, 2, 3 Economic Order Quantity 10
6 FNSACC501/1, 2, 3 Multiple Choice 21
100
Question 1
Question 1 - Must show calculations
Potato is considering two mutually exclusive projects. Both of the projects have a life of six years.
Project Tom will cost $250,000 and have a residual value of $50,000. Project Je
y will cost $180,000 and have No residual at the end of its useful life.
The Expected minimum return is 10%. The After Tax Cash Flows from each project are as follows.
Y ears Project Tom Project Je
y
$ $
1 25,000 70,000
2 20,000 50,000
3 28,000 80,000
4 45,000 25,000
5 90,000 35,000
6 60,000 40,000
a. Calculate the Accounting Rate of Return based on Average Investment for each Project?
b. Calculate the Accounting Rate of Return based on Average Investment for each Project?
Calculating the depreciation per yea
Project Tom:
Depreciation = (250000-50000)/6
= 33333
Project Je
y
Depreciation = 180000/6
= 30000
Calcualting average income
Y ears Project Tom Project Je
y
1 58,333 100,000
2 53,333 80,000
3 61,333 110,000
4 78,333 55,000
5 123,333 65,000
6 93,333 70,000
Average income 78,000 80,000
Average investment 150000 90000
ARR 52.00% 88.89%
Question 2
Question 2 Must show calculations
Kate is considering the Purchase of a Machine that has a cost of $70,000.
The...