Question
Stargate Corporation is considering two projects of machinery that perform the same task. The required rate of return for these projects is RM10%. The projects
Stargate Corporation is considering two projects of machinery that perform the same task. The required rate of return for these projects is RM10%. The projects expected cash flows are as follows:
| Year | Machine MIR (RM) | Machine ZA (RM) |
| 0 | (17,000) | (17,000) |
| 1 | 8,000 | 2,000 |
| 2 | 7,000 | 5,000 |
| 3 | 5,000 | 9,000 |
| 4 | 3,000 | 9,500 |
Based on the above information, you are required to make an analysis for the decision of Capital Budgeting based on the following techniques:
- Net Present Value, NPV
- Profitability Index, PI
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Valuation Measuring and managing the values of companies
Authors: Mckinsey, Tim Koller, Marc Goedhart, David Wessel
5th edition
978-0470424650, 9780470889930, 470424656, 470889934, 978-047042470
