Klip-klip Corporation is a real estate investment trust (REIT) company and its a well established and incorporated since 10 years ago. Currently the firm is plan to have two projects that would be developed in Golden Triangle, Kuala Lumpur as Project A and another one is in Iskandar Puteri, Johor Bahru as Project B.

Both projects takes for 4 years and and initial outlay for both are RM10,000. The firms cost of capital is 12%. Cash flow for Project A in Year 1 is RM6,500, Year 2 and Year 3 is RM3,000 and Year 4 is RM1,000. Cash flow for Project B are RM3,500 for Year 1 to Year 4.

Required:

1. Calculate each projects NPV, IRR and discounted payback.

(12 marks)

(CLO2:PLO6:C4)

2. Criticise if the firm should accept project A if they are independent project.

(3 marks)

(CLO2:PLO6:C6)