Question
JB Hi-Fi management is considering the two following options of buying a new equipment for a new investment project with the same initial cost. Year:-
JB Hi-Fi management is considering the two following options of buying a new equipment for a new investment project with the same initial cost. Year:- 0 , 1, 2, 3, 4 Project A :-, -$78500, $43000, $29000, $23000, $21000, Project B:-, -$78500, $21000, $28000 , $34000, $41000 A) which project the company should choose based on NPV Criterion if the required rate of return is 11%. B) Which project the company should choose based on P1 criterion if the required rate of return is 11%. C) Which project the company should choose if the payback criterion of minimum 3 years applies. D) After selecting the optimum project the company is thinking of financing the project which costs totally 1 million dollars by a capital structure of 40% of debt and 60% of equity . The dividend paid out to shareholders at the end of financial year is $1800000. Define the net profit of the company in the current year by applying the residual theory. E) compute the dividend payout ratio.
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