1 Bon Industries has four potential projects, all with an initial cost of $1,200,000. The capital budget for the year will allow on to accept only one of the four projects The followings are the expected cash flows: CF Year Project R Projects Project RM 400,000.00 RM 450,000.00 RM 400,000.00 RM 200,000.00 RM 300,000.00 RM 400,000.00 RM 200,000.00 RM 400,000.00 RM 200,000.00 RM 200,000.00 RM 200,000.00 RM 200,000.00 5 RM 200,000.00 RM 200,000.00 RM 200,000.00 RM 600,000.00 RM 250,000.00 RM 400,000.00 Note: 1 The company's cost of capital is 5.3% 2 113 of the intial cost is comprised of fixed asset purchase, which 30% of the value is recoverable at the end of the project 3 Working capital requirement is 10% of the year on year cash flows 4 Corporate tax is 28% Year Working Capital Recovered 0 Project R RM1,200,000.00 1 RM 400.000.00 2 RM 200,000.00 3 RM 200,000.00 4 RM 200,000.00 5 RM 200,000.00 6 RM 600,000.00 Working Capital 10% 40,000 -20,000 20,000 -20,000 20,000 Tas Net Cash Flow -1,200,000 360,000 180,000 190,000 180,000 190,000 -33,600 626,400 Discounted Net Cash Flow -1,200,000 341,880.34 360,000/11.05371 162,336.34 154,165.57 146,406.05 139,037.03 459,495.77 203,321.15 60,000 NPV Find Asset - 1,200,000 -1/3 - 400,000 Fixed Asset Recoverable 400,000x30% - 120,000 Ta 120,000 23% -33,600 Find : PI, MIRR, IRR Which project to choose