The financial manager of a company has to advice the Board of Directors on choosing between...
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The financial manager of a company has to advice the Board of Directors on choosing between two compelling project proposals which require an investment of Kshs. 10,000 and Kshs. 50,000 respectively and are expected to generate cash flows as under: Project I Kshs. 10,000 Outlay at t = 0 Net flows t = 1 t=2 t = 3 t = 4 t = 5 5,000 5,000 3,000 2,000 1,500 Project II Kshs. 50,000 10,000 15,000 25,000 25,000 21,000 Required: Calculate: i) The pay-back period ii) The excess present value at 10% iii) The internal rate of return Also suggest which project should be selected by the firm. (3 marks) (5 marks) (7 marks) The financial manager of a company has to advice the Board of Directors on choosing between two compelling project proposals which require an investment of Kshs. 10,000 and Kshs. 50,000 respectively and are expected to generate cash flows as under: Project I Kshs. 10,000 Outlay at t = 0 Net flows t = 1 t=2 t = 3 t = 4 t = 5 5,000 5,000 3,000 2,000 1,500 Project II Kshs. 50,000 10,000 15,000 25,000 25,000 21,000 Required: Calculate: i) The pay-back period ii) The excess present value at 10% iii) The internal rate of return Also suggest which project should be selected by the firm. (3 marks) (5 marks) (7 marks)
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Related Book For
Accounting for Governmental and Nonprofit Entities
ISBN: ?978-0073379609
15th Edition
Authors: Earl R. Wilson, Jacqueline L Reck, Susan C Kattelus
Posted Date:
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