MYVI

Years

Cash Flow

Payback period

7%

PV = Cash flow x PVIF

3.22%

Cash flow x PVIF

0

(45,000)

45,000

1.0000

1.0000

1

12,500

32,500

0.9346

11,682

0.9688

12,110

2

10,000

22,500

0.8734

8,734

0.9386

9,386

3

13,500

9,000

0.8163

11,020

0.9093

12,276

4

5,000

4,000

0.7629

3,814

0.8809

4,405

5

8,000

(4,000)

0.7130

5,704

0.8535

6,828

(4,000)

1.0000

-

1.0000

-

Payback period

= 4 + (4000/8000)

Total Present Value

40,955

Total Present Value

45,004

= 4.50 years

Initial

(45,000)

Initial

(45,000)

Net Present Value

= 49000 - 45000

Net present Value

(4,045)

Net present Value

4

= 4000

(0.91)

Profitability Index

= 49000/45000

= 1.09 : 1

7%

4,045

Positive

3.22%

IRR

-

%

4,000

Negative

AXIA

Years

Cash Flow

Payback period

7%

PV = Cash flow x PVIF

7.08%

Cash flow x PVIF

0

(45,000)

45,000

1.0000

1.0000

1

11,000

34,000

0.9346

10,280

0.9339

10,273

2

11,000

23,000

0.8734

9,608

0.8721

9,593

3

11,000

12,000

0.8163

8,979

0.8145

8,959

4

11,000

1,000

0.7629

8,392

0.7606

8,367

5

11,000

(10,000)

0.7130

7,843

0.7103

7,814

(10,000)

1.0000

-

1.0000

-

Total Present Value

45,102

Total Present Value

45,006

Initial

(45,000)

Initial

(45,000)

Payback period

= 4 + (1000/11000)

Net present Value

102

Net present Value

6

= 4.09 years

(1.00)

Net Present Value

= 55000 - 45000

= 10000

7%

102

Positive

Profitability Index

= 55000/45000

7.08%

IRR

-

= 1.22 : 1

7%

10,000

Negative

Tai Chong Sdn Bhd is considering one of the two mutually exclusive projects, Myvi and Axia. The company's discount rate is 7%. The expected after-tax cash flows for both projects are as follow. Determine the best project that Tai Chong Sdn Bhd should invest into. Justify your answer.