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Gerimis Bhd. is considering two mutually exclusive projects with widely differing lives. The companys cost of capital is 10 percent. The project cash flows are
- Gerimis Bhd. is considering two mutually exclusive projects with widely differing lives. The companys cost of capital is 10 percent. The project cash flows are summarized below:
| Project A | Project B |
Initial Investment | ( 79,510) | ( 89,104) |
Year |
|
|
1 | 19,810 | 22,108 |
2 | 19,810 | 22,108 |
3 | 19,810 | 22,108 |
4 | 19,810 | 22,108 |
5 | 19,810 | 22,108 |
6 | 19,810 | 22,108 |
7 | 19,810 | 22,108 |
8 | 19,810 | 22,108 |
9 | 19,810 | 22,108 |
10 | 19,810 | 22,108 |
You are required to calculate and choose the project that Gerimis Mengundang should take by using:
- Payback period technique
- Net Present Value (NPV) technique
- Profitability Index (PI) technique
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