Question
PQR Corporation is considering two potential projects. The companys cost of capital is 10% and tax rate is 33%. Other information related to both projects
PQR Corporation is considering two potential projects. The company’s cost of capital is 10% and tax rate is 33%. Other information related to both projects are as follows:
Particulars | Project A | Project B |
Initial Investment | 6,000,000 | 7,000,000 |
Expected life | 8 years | 8 years |
Annual Income (before Tax & depreciation) | 1,500,000 | 1,800,000 |
Depreciation is charged on a straight-line basis. You are required to calculate: a. Payback period b. NPV c. Profitability index
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Management And Cost Accounting
Authors: Alnoor Bhimani, Srikant M. Datar, Charles T. Horngren, Madhav V. Rajan
7th Edition
1292232668, 978-1292232669
