ASANTA Ghana Ltd is considering investing in the following projects which are considered mutually exclusive:
ASANTA Ghana Ltd uses the straight line method of depreciation. However, tax-allowable depreciation is 30% on straight line basis. The cost of capital for the company is 20% per annum.
(Note: Advise the Company on which of the projects to implement or undertake.)
Required:
Compute the Payback period for each project. (3 marks)
View Solution
Decision: Project GO gives the lowest payback period and should be selected.