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You are instructed to prepare a detailed report about the following scenario using capital budgeting techniques. (80 marks) MHD Trading has provided the following
You are instructed to prepare a detailed report about the following scenario using capital budgeting techniques. (80 marks) MHD Trading has provided the following information related to a project, Initial investment is OMR 95,000 Cash inflows are as follows, Year 1 Year 2 Year 3 30,000 35,000 35,000 Year 4 35,000 Cost of capital is 11% MHD is planning to accept the project if it recovers the Initial investment within 3 years or less A. Calculate Pay-back period. (5 marks) B. Calculate Net Present value. (10 marks) C. Calculate Profitability Index. (5 marks) D. Calculate Internal Rate of return (20 marks) E. Discuss about each of the technique used above by highlighting THREE features for each technique used in the above calculations and the discussion must be appropriately cited and referenced from relevant academic literature sources. (25 marks) (word range 400-450) F. Based on LR and calculations above, provide recommendations for each technique and whether the project can be accepted or not. (15 marks) (word range 200-250)
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Answer Year Discounted factor 11 Present value Cumulative present value 0 initial investment 95000 1 95000 1 cash inflow 30000 09009 27027 27027 2 cas...Get Instant Access to Expert-Tailored Solutions
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