The following information relates to Ross Hill limited. The company has an opportunity to invest in one of two potential & mutually exclusive (but not both) projects

Capital Investment Appraisal:
The following information relates to Ross Hill limited. The company has an opportunity to invest in one
of two potential & mutually exclusive (but not both) projects. Each project will involve the purchase of a
new Plant. The following data relates to the two projects:
Net Profit Project A Project B
Plant 1 Plant 2
2020 45,000 10,000
2021 45,000 15,000
2022 45,000 25,000
2023 35,000 55,000
2024 35,000 65,000
2025 25,000 50,000
230,000 220,000
Additional Information:
• The initial cash investment for both plants will be £11,0000. The purchase would
take place on January 1, 2020. It is assumed that all other cash flows would be
received on 31 December each year.
• Both plants would have a life of six years. Plant 1 has no residual value and plant 2
has a residual value of £8,000.
• The company uses a straight-line method of depreciation.
• The cost of capital is 16%.
Required:
a) Using appropriate investment appraisal techniques, advise senior management on whether
they should opt for project A or project B. (20 Marks)
b) Discuss the limitations of using investment appraisal techniques in long term decision making.
(10 Marks)
(Total: 30 marks)

Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more