Franklin Lumber Case 21 ( Capital Budgeting Procedures )

timer Asked: Apr 25th, 2016

Question description

Q1 - Calculate the annual cash flows of the Dakola (the Nakoi s cash flow is 265,820 per year , not including its after - tax terminal value)

Q2- Calculate the Dakota s :

a- Payback period

b- Average accounting rate of return (AARR)

c- IRR

Q3- Rank the plywood presses by the five techniques listed in question 2

Q4- Do the techniques rank the projects the same ? If not , why do the rankings differ ?

Q5- Parker s two primary capital budgeting methods are the payback and the average accounting rate of return.

a- What are the disadvantages of the payback ? What , if any, are its advantages?

b- What are the disadvantages of the AARR ? What , if any , are it s advantages?

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