Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please do it in excel Question 1 Apart from opening a new store in Selayang, Waris Bhd is also considering opening a store in Cherating.
please do it in excel
Question 1 Apart from opening a new store in Selayang, Waris Bhd is also considering opening a store in Cherating. Like the Selayang store, this store will have the same initial cost of RM1,000,000. The company must now decide which store to invest in: Selayang or Cherating. The cash flows associated with each proposed store are shown in the following table: Cash Inflows Year Selayang Cherating 1 RM100,000 RM250,000 2 200,000 250,000 3 300,000 250,000 4 400,000 250,000 5 500,000 250,000 The discount rate/cost of capital is 8%. (a) Calculate the payback period for each proposed store. (2 marks) (b) Calculate the net present value (NPV) for each proposed store. (2 marks) (c) Calculate the internal rate of return (IRR), rounded to the nearest whole percent, for each proposed store. (2 marks) (d) Draw the net present value profiles for each store on the same set of axes, and discuss any conflict in ranking that may exist between NPV and IRR. The discount rates are at 0%, 7.9%, 12% and 16%. (4 marks) (e) Evaluate the acceptability of each proposed store dictated by each measure, and indicate which project you would recommend. Explain why. (2 marks)Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started