Question
Question 6 ABC Ltd is planning to make an investment in the US using cash (not borrowing). There are two projects to choose from, however,
Question 6
ABC Ltd is planning to make an investment in the US using cash (not borrowing). There are two projects to choose from, however, the company will only choose one investment due to limited resources. After a careful analysis of the investment performance, the net present value (NPV) and payback period are calculated as below.
|
| Investment 1 | Investment 2 |
| NPV | 300 | 200 |
| PayBack period | 5 years | 4 years |
A. Based on the information above, advise ABC management on which investment opportunity they should select.
B. Identify and explain 3 risks that ABC should consider when investing abroad. (6 marks)
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Fundamental financial accounting concepts
Authors: Thomas P. Edmonds, Frances M. Mcnair, Philip R. Olds, Edward
8th edition
978-007802536, 9780077648831, 0078025362, 77648838, 978-0078025365
