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Your company has projected the following cash flows of project A, B and C as follows. The required rate of return on all projects is
Your company has projected the following cash flows of project A, B and C as follows. The required rate of return on all projects is 13%. Calculate:
Year | Project A | Project B | Project C |
0 | (90,000) | (100.000) | (80,000) |
1 | 30,000 | 40,000 | 25,000 |
2 | 30,000 | 40,000 | 20,000 |
3 | 30,000 | 30,000 | 50,000 |
4 | 30,000 | 30,000 | 10,000 |
(i) Net Present Value (NPV). (6 marks)
ii) Profitability Index. (3 marks) (iii) Internal rate of return. (3 marks) (iv) Justified which project we should accept or reject. (3 marks)
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