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Company Desa is considering two mutually exclusive projects, A and B. Project A costs 120,000 and is expected to generate RM65,000 in year one and
Company Desa is considering two mutually exclusive projects, A and B. Project A costs 120,000 and is expected to generate RM65,000 in year one and RM75,000 in year two. Project B costs RM190,000 and is expected to generate RM64,000 in year one, RM67,000 in year two, RM56,000 in year three, and RM45,000 in year four. The firm's required rate of return for these projects is 10%. i) For each project, draw a timeline that shows cash flow spent or received during the projects lives. ii) What is the net present value (NPV) for Project A and B? iii) Compute profitability index for Project A and B? iv) Based on your answer, which project should you select. Justify your
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