## Questions:

1.Delcom Chemicals is considering the purchase of a new industrial business for \$800,000. The current owners have provided Delcom Chemicals with their financial information which has shown that they will expect a profit of \$200,000 in year one, \$210,000 in year two, \$300,000 in year three, \$320,000 in year four, and \$340,000 in year five.

Using the information above, Calculate the net present value (assuming a discount rate of 13%), payback period and accounting rate of return (disregarding depreciation).

Net Present Value

200,000/(1+.13)+210,000/(1+.13)2+300,000/(1+.13)3+ 320,000/(1+.13)4+ 340,000/(1+.13)5- 800,000= \$253,907.01 using the formula.

Using the table=

2.In your own words using appropriate references, provide a discussion about what these ratios calculate and whether they show that this investment should go ahead or not.

3.Delcom has also been provided with the opportunity to purchase an existing chemical plant for \$800,000. Information to help them determine their future cash flow for the new business if they were to purchase it is shown below for the next 4 months starting in January. Assume that there is 4 weeks in every month.

Total monthly running costs:

• 14 staff members who will work 7.5 hours a day, 5 days a week at \$26.50 per hour.
• Raw materials \$300,000
• Electricity \$100,000

Delcom has been told by the current owners that they sell 400 tons of chemicals per month at a cost of \$1600.00 per ton.  If the business is purchased, Delcom intends to have \$100,000 in the business bank account.

Using the information above, construct a sales budget and a labour budget for January, February, March and April.

5.In your own words using appropriate references, critically analyse, describe and state which business should be purchased.

### Cite This Work

My Assignment Help (2021) BUS106 Accounting For Business [Online]. Available from: https://myassignmenthelp.com/free-samples/bus106-accounting-for-business/net-present-value.html
[Accessed 07 December 2022].

My Assignment Help. 'BUS106 Accounting For Business' (My Assignment Help, 2021) <https://myassignmenthelp.com/free-samples/bus106-accounting-for-business/net-present-value.html> accessed 07 December 2022.

My Assignment Help. BUS106 Accounting For Business [Internet]. My Assignment Help. 2021 [cited 07 December 2022]. Available from: https://myassignmenthelp.com/free-samples/bus106-accounting-for-business/net-present-value.html.

## Stuck on Any Question

250 words

### We Can Help!

Get top notch assistance from our best tutors !

### Content Removal Request

If you are the original writer of this content and no longer wish to have your work published on Myassignmenthelp.com then please raise the content removal request.

## 5% Cashback

On APP - grab it while it lasts!