Levine Berhad Levine Berhad is considering two mutually exclusive projects, A and B. Project A costs RM180,000, with additional working capital of RM15,000. The project is expected to generate RM150,000 in year one and RM75,000 in year two, and final disbursement in year 3 is 30% of the project cost. The working capital will also be recovered at Year 3. Assume the cost of the project of 5.5%. Project B's initial outlay is RM200,000 including purchase of fixed asset of RM50,000. The cash flows are RM80,000 in year one, RM100,000 in year two, RM56,000 in year three, and RM45,000 in year four. At the termination of the project, 50% of the fixed asset value can be recovered. Assume cost of project of 5.3%. Note: reinvestment value refers to future value

Questions:

1. Project A's Initial Outlay is RM______________.

2.Project A's Terminal Value is RM____.

3. Project A's PV of the OCF in Year 1 is RM____________.

4.Project A's PV of the OCF in Year 2 is RM____________.

5.Project A's PV of the OCF in Year 3 is RM____________.

6.Total PV of Project A is RM____________.

7.Project A's FV of the OCF in Year 1 is RM____________.

8.Project A's FV of the OCF in Year 2 is RM____________.

9.Project A's FV of the OCF in Year 3 is RM____________.

10.Total FV of Project A is RM___________.

11.Project A's Payback Period is ___________.

12. Project A's Discounted Payback Period is ___________.

13.Project A's Net Present Value is RM__________.

14.Project A's Profitability Index (PI) is _________.

15.Project A's Internal Rate of Return (IRR) is _________%.

16. Project A's Modified Internal Rate of Return (MIRR) is _________%.

17.Project A's Equivalent Annual Annuity is RM____________.

18.Project B's Initial Outlay is RM______________.

19. Project B's Terminal Value is RM__________.

20.Project B's PV of the OCF in Year 1 is RM____________.

21. Project B's PV of the OCF in Year 2 is RM____________.

22.Project B's PV of the OCF in Year 3 is RM____________.

23.Project B's PV of the OCF in Year 4 is RM____________.

24.Total PV of Project B is RM___________.

25.Project B's FV of the OCF in Year 1 is RM____________.

26.Project B's FV of the OCF in Year 2 is RM____________.

27.Project B's FV of the OCF in Year 4 is RM____________.

28.Total FV of Project B is RM___________.

29.Project B's Payback Period is ___________.

30.Project B's Discounted Payback Period is ___________.

31.Project B's Net Present Value is RM__________.

32.Project B's Profitability Index (PI) is _________.

33.Project B's Internal Rate of Return (IRR) is _________%.

34.Project B's Modified Internal Rate of Return (MIRR) is _________%.

35.Project B's Equivalent Annual Annuity is RM____________.

36.Based on NPV, Project B is more profitable than Project A.

True OR False ?

37.Based on DPP, it takes longer for Project A to recover the cost of the project.

True OR False ?

38.Based on IRR, the company should accept Project A.

True OR False ?

39.Based on EAA, the company should accept project B as the total will be more.

True OR False ?

40. Overall assessment based on Capital Budgeting Techniques, Project B should accepted.

True OR False ?