Two all equity financed companies, Simba Ltd and Yanga Ltd are planning to pursue different investment projects that will last for 4 years. Simba Ltds investment requires TZS 1billion and will yield cash inflows of TZS 800 million in each of the years 1 to year 4. Yanga Ltds investment on the other hand requires an initial outlay of TZS 5 billion and will produce cash inflows of TZS 1 billion in each of the years 1 to 4. The cost of capital for the investments to be made by Simba Ltd and Yanga Ltd are 15% and 20% respectively. Assume the economic depreciation is at the same as accounting depreciation following straight line.

Required

Calculate the Values of NPV of the projects by both companies

Determine the market value added by both companies and comment on the results.