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4. Selendang Ayu Construction (SAC) is considering two investment projects, each of which requires an up-front expenditure of RM25 million. SAC estimates that the cost
4. Selendang Ayu Construction (SAC) is considering two investment projects, each of which requires an up-front expenditure of RM25 million. SAC estimates that the cost of capital is 10% and that the investments will produce the following after-tax cash flows (in millions of ringgit): SETAPAK PROJECT (RM'000,000) 10 YEAR 1 2 3 4 ULU KELANG PROJECT (RM'000,000) 0 0 0 45 10 10 10 DE What is the payback period for each of the projects? What is the profitability index (PI) for each of the projects? If the two projects are independent and the cost of capital is 10%, which project or projects should the firm undertake? If the two projects are mutually exclusive and the cost of capital remains at 10%, which project should the firm undertake? iv)
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