Question $1$

Debunga Berhad is trying to invest in three mutually exclusive flower design projects. All

projects have an initial cash outflow of RM$5,000.$ Given below are the cash inflows for each

project:

From the information given, you are required to answer the following questions:

a$.$ If the company applies the Payback Period decision rule, which project should Debunga

Berhad choose?

b$.$ If the required rate of return is $12\%$ and the company applies the Net Present Value

decision rule, which project should Debunga Berhad choose?

$(8$ Marks$)$

c$.$ If the company applies the Profitability Index decision rule, which project should Debunga

Berhad choose?

$(8$ Marks$)$

d$.$ Based on your answers in part $($a$)$ to $($c$),$ which project should Debunga Berhad finally

choose to invest? Explain your answer.

$(6$ Marks$)$