Question
XYZ Construction is considering two projects to develop. The expected cash inflows are as follows : Project M Project N Year 110,00025,000 Year 215,00025,000 Year
XYZ Construction is considering two projects to develop. The expected cash inflows are as follows :
Project MProject N
Year 110,00025,000
Year 215,00025,000
Year 3 20,00025,000
Year 425,00025,000
Year 530,00025,000
Each Project requires an investment of $100,000. A rate of 10% has been selected for the
NPV Analysis.
Required :
a)Calculate the NPV and the Profitability Index and suggest which project should be
recommended based on each method.
b)Explain what are the key decisions a Finance Manager has to take in an
Organization with suitable examples.
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Fundamental Managerial Accounting Concepts
Authors: Thomas Edmonds, Christopher Edmonds, Bor Yi Tsay, Philip Old
7th edition
978-0077632427, 77632427, 78025656, 978-0078025655
