Investment appraisal

LH Limited’s main cutting machine is due for replacement. Buying a new machine will cost $260 000. The case provides forecasts of output, costs, revenue and discount factors.

Feb/March 2017

Look at Source B2 in the Insert.

Feb/March 2018

Consult Source B2 in the Insert.

Feb/March 2020

Consult Source B2 in the insert.

Feb/March 2022

Refer to Source A in the insert. The directors of RP plc are thinking about paying $100000 to obtain a licence, which would give the company the right to manufacture and sell a product for the next four years.

Feb/March 2024

At Artem Limited, one of the assembly machines is due for replacement.

May/June 2016

At Artem Limited, one of the assembly machines has to be replaced. Financial data, operating data and discount factors are supplied.

May/June 2016

Tisha is thinking about buying a new machine for her factory. The machine would cost $125000. At the end of Year 5, it will be sold for $65000. It will be used to make one of Tisha’s current products.

May/June 2017

Jason is thinking about putting money into constructing a property so that he can earn rental income.

May/June 2018

The directors of T Limited are weighing up an investment in Machine A to make a new product.

May/June 2019

Gerry produces a product with Machine B and is thinking about replacing it with Machine X. Budgeted figures and extra financial data are provided.

May/June 2019

The directors at T Limited are thinking about investing in Machine A so that a new product can be manufactured.

May/June 2019

Consult Source B2 in the insert.

May/June 2021

Read Source B2 from the insert.

May/June 2021

Consult Source B2 in the insert.

May/June 2021

Refer to Source B2 in the insert.

May/June 2022

Read Source A from the insert.

May/June 2023

Read Source A in the insert, which contains details about a planned project.

May/June 2023

Use Source A in the insert.

May/June 2023

Waheed is deciding on a project and needs to judge its financial worth by using net cash flows and net present value.

May/June 2025

Refer to Source A in the insert.

May/June 2025

Use Source A in the insert.

May/June 2025

International Dancing is a dance club that requires each member to pay an annual subscription of $500.

Oct/Nov 2016

Alexander is planning to launch a new project that will make either Product X or Product Y. Producing either product will need an extra capital cost of $50000. Each product is forecast to run for 4 years.

Oct/Nov 2016

N Limited is considering a new project that requires an initial outlay of $225\,000.

Oct/Nov 2016

Wong Ho runs a small factory and is thinking about replacing a machine that breaks down often.

Oct/Nov 2017

Marie is weighing up a project to make a new product. To produce it, she must purchase a new machine costing $250 000, and the machine is expected to last for 4 years.

Oct/Nov 2018

Asif is weighing up a farming business that would grow soya beans. He could hire land for $800 per field each year.

Oct/Nov 2018

The directors at P Limited are planning to introduce a new product and are weighing up whether to purchase Machine X.

Oct/Nov 2019

Ronaldo is thinking about launching a new product, which means he must buy a new machine. Two options are available, Machine A and Machine B, yet only one can be chosen. Each machine will be sold for scrap after five years and has no residual value.

Oct/Nov 2019

Consult Source B2 in the insert.

Oct/Nov 2020

Consult Source B2 in the insert. Kurt is weighing up two possibilities for buying machinery to make a new product.

Oct/Nov 2021

This question tests investment appraisal with net present value.

Oct/Nov 2021

Read Source B1 in the insert supplied.

Oct/Nov 2022

Read the Source B provided in the insert.

Oct/Nov 2023

Consult Source B in the insert.

Oct/Nov 2024

Refer to Source B in the insert.

Oct/Nov 2024

Consult Source C in the insert.

Oct/Nov 2025

Consult Source A in the insert.

Oct/Nov 2025