Question
The first question:- below is the expected cash flow of the two investment opportunities (Project A, Project B) available to Rafidain, if you know that
The first question:- below is the expected cash flow of the two investment opportunities (Project A, Project B) available to Rafidain, if you know that the net investment initial investment of project (A) is JD 500,000, while the net investment for project B is 600,000 JD. The company intends to finance the net investment for both projects according to the following: 40% with long-term loans, interest rate 8%, 40% in ordinary shares, if you know that the risk-free rate is 2%, the existing risk premium is 10%, and the beta is 1.5%. And 20% financing with retained profits. The tax rate is 30%. Project A: First year 200,000, second year 200,000, third year 150,000, fourth year 50,000. The second project B: the first year 150,000, the second year 150,000, the third year 250,000, the fourth year 150,000.
REQUIRED ;- The two projects are required to be evaluated in the light of 1- The standard of the period of recovery 2 - the price of the profitability index.
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