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Present Value, Future Value and Mortgage tables are separately attached with exam paper. Question 2 A manufacturing company is looking for an investment proposal to
Present Value, Future Value and Mortgage tables are separately attached with exam paper. Question 2 A manufacturing company is looking for an investment proposal to setup a new plant to produce its coming year orders. The relevant data for the installation of two plants are as follows: The company follows the straight-line method of depreciation and the estimated salvage value for both types of plant is zero. The corporate tax rate is 40% and the interest rate is 10%. Calculate and analyze your analysis for the most profitable investment based on the following methods: (a) Net Present Value. (20 marks) (b) Profitability Index. (5 marks) (c) Payback period. (20 marks) [Total: 45 Marks]
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