Question
(can someone solve it all) To receive partial credit, you need to show relevant work for all numerical questions (the steps for solutions) Al-Alis firm
To receive partial credit, you need to show relevant work for all numerical questions (the steps for solutions)
Al-Alis firm is considering two projects and the cash flows associated with them are shown in the following table. The firm has set its cost of capital at 11 %
Year | Project A | Project B |
0 | - SR 200 | - SR 200 |
1 | 80 | 100 |
2 | 80 | 100 |
3 | 80 | 100 |
4 | 80 |
|
1- What is the payback period (PBP) for each project?
| Project A | Project B |
Payback period (PBP) |
|
|
2- Calculate the NPV for each project?
| Project A | Project B |
NPV |
|
|
3- What is the IRR for each project ? ( to help you in calculating the IRR for project A is located between 21% & 22 % and for project B is between 23% & 24).
| Project A | Project B |
IRR |
|
|
4- Compute the Profitability Index (PI) for each project?
| Project A | Project B |
Profitability Index (PI) |
|
|
5- In light of your answers above, suppose that these two projects might be mutually exclusive or independent. According to these two assumptions, fill in the blanks in the table below with the suitable answer:
Points | Investment Criteria | If A and B are mutually exclusive, then I would select | If A and B are independent, then I would select |
| PBP |
|
|
| NPV |
|
|
| IRR |
|
|
| PI |
|
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started