Case 1 The Jamaica Corporation has budgeted AED 4,800,000 for an investment for a warehouse. Management has provided the following financial data for two warehouses (A) and (B):

Cash flow	A		Cash flow	B
Year 1	1,850,000		Year 1	1,200,000
Year 2	1,400,000		Year 2	1,400,000
Year 3	1,250,000		Year 3	1,600,000
Year 4	1,400,000		Year 4	1,820,000

Discount rate is 9% with the following Present value interest factors:

Cost	1
Cash flow
Year 1	0.9174
Year 2	0.8417
Year 3	0.7722
Year 4	0.7084

Required:

1. Using the Net Present Value method determine the best investment (mutually exclusive events)

2. Using the Payback period determine the best investment.

Answer

NPV (A)	Amount	PVIF	Present Value
NPV (B)
	Amount	PVIF	Present Value
Payback A	Amount		Present Value
Payback B	Amount		Present Value