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(c) Powerbank Berhad is considering two projects; A and B. The initial cash outlay associated with project A is RM50,000 and B is RM70,000. The
(c) Powerbank Berhad is considering two projects; A and B. The initial cash outlay associated with project A is RM50,000 and B is RM70,000. The required rate of return for both projects is 12% and below is the expected annual free cash flows from each project.
YEAR | PROJECT A (RM) | PROJECT B (RM) |
0 | -50,000 | -70,000 |
1 | 12,000 | 13,000 |
2 | 12,000 | 13,000 |
3 | 12,000 | 13,000 |
4 | 12,000 | 13,000 |
5 | 12,000 | 13,000 |
6 | 12,000 | 13,000 |
Calculate the following:
Net Present Value (3 marks)
Profitability Index (3 marks)
Internal Rate of Returns (3 marks)
Which project should be accepted? (1 marks)
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