Greenwich plc is considering adding two new products at a subsidiary to improve its overall competitiveness. The new products are enthusiastically supported by the managers responsible and an immediate decision is required. It is normal for the managers to calculate the net present value (NPV) for the projects before it is accepted or rejected.
Details of the proposals

-Calculate the relevant annual cash flow for Project B

A)£187,567.
B)£236,096.
C)£136,096
D)£36,096.

Question

Greenwich plc is considering adding two new products at a subsidiary to improve its overall competitiveness. The new products are enthusiastically supported by the managers responsible and an immediate decision is required. It is normal for the managers to calculate the net present value (NPV) for the projects before it is accepted or rejected.
Details of the proposals

-Calculate the relevant annual cash flow for Project B

A)£187,567. 
B)£236,096. 
C)£136,096 
D)£36,096.

Quizplus · Accepted Answer

The relevant annual cash flow for a project is calculated by taking into account all the incremental cash inflows and outflows that would result from undertaking the project. Without specific details on Project B's revenues, costs, investments, and any salvage value, it's impossible to provide a detailed calculation. However, based on the options provided, if C is identified as the correct answer, it suggests that after considering all relevant financial factors, the net annual cash flow attributable to Project B is £136,096. This figure would be the result of subtracting all annual costs and investments from the annual revenues generated by the project, adjusted for any tax implications and considering any additional incremental cash flows such as salvage value at the end of the project's life.

Greenwich Plc Is Considering Adding Two New Products at a Subsidiary