a) Calculate the payback period for each project. The maximum allowable payback period set by the company for all projects is 3 years. b) Calculate the net present value (NPV) for each project c)...


a) Calculate the payback period for each project. The maximum allowable payback period set
by the company for all projects is 3 years.




b) Calculate the net present value (NPV) for each project




c) Calculate the profitability index (PI) for each project




d) Calculate the internal rate of return (IRR) for each project.




e) Based on the answer in (a) – (d), explain briefly which project should be accepted.




f) If the project is independent project, how would your answer change in part (e)




Note: 1. I need only e,f no question answer. only e and f
2. No need excel formula


QUESTION 3<br>Fitch Industries is in the process of choosing the better of two equal-risk, mutually exclusive<br>capital expenditure projects-M and N. The relevant cash flows for each project are shown in<br>the following table. The firm's cost of capital is 14%.<br>Project M (RM)<br>Project N (RM)<br>Initial Investment (RM)<br>28,500<br>27,000<br>Year<br>Cash Flow (RM)<br>1<br>10,000<br>11,000<br>2<br>10,000<br>10,000<br>3<br>10,000<br>9,000<br>4<br>10,000<br>8,000<br>

Extracted text: QUESTION 3 Fitch Industries is in the process of choosing the better of two equal-risk, mutually exclusive capital expenditure projects-M and N. The relevant cash flows for each project are shown in the following table. The firm's cost of capital is 14%. Project M (RM) Project N (RM) Initial Investment (RM) 28,500 27,000 Year Cash Flow (RM) 1 10,000 11,000 2 10,000 10,000 3 10,000 9,000 4 10,000 8,000

Jun 08, 2022
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