ART B: SHOW YOUR CALCULATIONS. INTELEK Corporation is in the process of expansion its business operation. Provided below is the after-tax cash flows for both projects. Cost of capital will be 10%. Year Project A (RM) Project B (RM) 0 50,000 47,000 1 15,000 20,000 2 15,000 (10,000) 3 15,000 15,000 4 15,000 14,000 5 15,000 20,000 For each project, calculate: a) Payback Period and Net Present Value b) Suggest which project should the company invest , why? APPENDIX – TABLE TIME VALUE OF MONEY @ 10% Year PVIF (10%) PVIFA (10%) 1 0.9091 0.9091 2 0.8264 1.7355 3 0.7513 2.4869 4 0.6830 3.1699 5 0.6209 3.7908
ART B: SHOW YOUR CALCULATIONS. INTELEK Corporation is in the process of expansion its business operation. Provided below is the after-tax cash flows for both projects. Cost of capital will be 10%. Year Project A (RM) Project B (RM) 0 50,000 47,000 1 15,000 20,000 2 15,000 (10,000) 3 15,000 15,000 4 15,000 14,000 5 15,000 20,000 For each project, calculate: a) Payback Period and Net Present Value b) Suggest which project should the company invest , why? APPENDIX – TABLE TIME VALUE OF MONEY @ 10% Year PVIF (10%) PVIFA (10%) 1 0.9091 0.9091 2 0.8264 1.7355 3 0.7513 2.4869 4 0.6830 3.1699 5 0.6209 3.7908
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 18EA: Consolidated Aluminum is considering the purchase of a new machine that will cost $308,000 and...
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ART B: SHOW YOUR CALCULATIONS. INTELEK Corporation is in the process of expansion its business operation. Provided below is the after-tax cash flows for both projects. Cost of capital will be 10%.
| Year | Project A (RM) | Project B (RM) |
| 0 | 50,000 | 47,000 |
| 1 | 15,000 | 20,000 |
| 2 | 15,000 | (10,000) |
| 3 | 15,000 | 15,000 |
| 4 | 15,000 | 14,000 |
| 5 | 15,000 | 20,000 |
For each project, calculate:
a) Payback Period and
b) Suggest which project should the company invest , why?
APPENDIX – TABLE
| Year | PVIF (10%) | PVIFA (10%) |
| 1 | 0.9091 | 0.9091 |
| 2 | 0.8264 | 1.7355 |
| 3 | 0.7513 | 2.4869 |
| 4 | 0.6830 | 3.1699 |
| 5 | 0.6209 | 3.7908 |
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