Question
Q.1. a) Examine the scope of fundamental analyses in investment process? How it would help a global investor in choosing his/her portfolio investment? b) Mr.
Q.1. a) Examine the scope of fundamental analyses in investment process? How it would help a global investor in choosing his/her portfolio investment?
b) Mr. Khalid faced with two investment projects A or B. Each requires an initial investment of OMR 100 000, with the following anticipated cash flow ;
Year | Project A | Project B |
Year 1 | 20000 | 30000 |
Year 2 | 20000 | 40000 |
Year 3 | 20000 | 30000 |
Year 4 | 20000 | 10000 |
Year 5 | 20000 | 10000 |
Year 6 | 20000 | 10000 |
The cost of capital is estimated at 8%
Find:
a. The Pay Back Period for each project
b. The Average Rate of Return on each project
c. The Net Present Value of each project
d. What difference would it make if the cost of capital were higher (or lower?)
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