QUESTION 5 , Your company is considering to choose one of the two projects: Project Gold and Project Diamond. Each project will last 5 years and have no salvage value at the end. The company's...

QUESTION 5 ,<br>Your company is considering to choose one of the two projects: Project Gold and Project<br>Diamond. Each project will last 5 years and have no salvage value at the end. The company's<br>required rate of return for all investment projects is 9%. The cash flows of two projects are<br>provided below.<br>Gold<br>Diamond<br>Cost<br>$485 000<br>$520 000<br>Future Cash Flows<br>Year 1<br>105 850<br>117 050<br>Year 2<br>153 250<br>162 400<br>Year 3<br>225 650<br>275 500<br>Year 4<br>245 000<br>255 000<br>Year 5<br>250 350<br>260 000<br>Required:<br>a. Identify which project should your company accept based on Net Present l.un method?<br>4 /6<br>b. Identify which project should your company accept based on Discounte<br>method if the payback criterion is maximum 2.5 years?<br>rio<br>

Extracted text: QUESTION 5 , Your company is considering to choose one of the two projects: Project Gold and Project Diamond. Each project will last 5 years and have no salvage value at the end. The company's required rate of return for all investment projects is 9%. The cash flows of two projects are provided below. Gold Diamond Cost $485 000 $520 000 Future Cash Flows Year 1 105 850 117 050 Year 2 153 250 162 400 Year 3 225 650 275 500 Year 4 245 000 255 000 Year 5 250 350 260 000 Required: a. Identify which project should your company accept based on Net Present l.un method? 4 /6 b. Identify which project should your company accept based on Discounte method if the payback criterion is maximum 2.5 years? rio

Jun 04, 2022

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QUESTION 5 , Your company is considering to choose one of the two projects: Project Gold and Project Diamond. Each project will last 5 years and have no salvage value at the end. The company's...

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