Question 1

The following two projects are being considered by your company:

Project A Project B

RM RM

Investment 800,000 800,000

Net Cash Inflows

Year 1 40,000 400,000

Year 2 160,000 300,000

Year 3 800,000 300,000

Year 4 80,000 40,000

Required :

1. For each project, prepare net present value calculations at:

1. 10%
2. 15%
3. 20%

1. Calculate the Internal Rate of Return (IRR) of:

1. Project A
2. Project B

1. Advise your company as to which project should be undertaken.