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a) Nuha Dina Berhad is planning to venture into a new project. The cost of capital is 10 percent. The expected cash flows for each
a) Nuha Dina Berhad is planning to venture into a new project. The cost of capital is 10 percent. The expected cash flows for each project is given as follows: Year 0 1 2 3 4 5 Cash Flow A (RM) (RM50,000) 15,000 15,000 15,000 15,000 15,000 Cash Flow B (RM) (RM80,000) 0 0 70,000 0 70,000 i. Compute the payback period for both projects. (4 marks) ii. Compute the net present value (NPV) for both projects. (6 marks) iii. Compute the internal rate of return for Project A. (2 marks) iv. Based on NPV, which project would you choose if it is a mutually exclusive project? State your reason. (2 marks)
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