Question
(CAPITAL BUDGETING) QUESTION 5 Jati Corporation is evaluating two mutually exclusive projects. Below is the after-tax cash flows for both projects. YEAR PROJECT C (RM)
(CAPITAL BUDGETING)
QUESTION 5
- Jati Corporation is evaluating two mutually exclusive projects. Below is the after-tax cash flows for both projects.
| YEAR | PROJECT C (RM) | PROJECT D (RM) |
| 0 | (500,000) | (480,000) |
| 1 | 50,000 | 132,000 |
| 2 | 150,000 | 132,000 |
| 3 | 250,000 | 132,000 |
| 4 | 200,000 | 132,000 |
| 5 | 100,000 | 132,000 |
The cost of capital is 10%.
- Calculate the payback period for each project. (4 marks)
- Calculate the net present value of each project. (6 marks)
- Calculate the internal rate of return for project D. Do interpolation.(4 marks)
- Which project would be selected? Why?
- Differentiate between mutually exclusive project and independent project. (4 marks)
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Auditing Cases An Active Learning Approach
Authors: Mark S. Beasley, Frank A. Buckless, Steven M. Glover, Douglas F. Prawitt
2nd Edition
0130674842, 978-0130674845
