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Homework answers / question archive / Your division is considering two investment projects, each of which requires an up front expenditure of RM25 million

Your division is considering two investment projects, each of which requires an up front expenditure of RM25 million

Finance

Your division is considering two investment projects, each of which requires an up front expenditure of RM25 million. You estimate that the cost of capital is 10 percent and that the investments will produce the following after tax flows: Year Project A (RM) Project B (RM) 1 10 8 2 10 8 3 10 8 4 10 8 (a) Calculate each project's payback period, net present value, and profitability index. (b) Which project or project should be accepted if they are independent?

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