Capital Budget Methods The private buildings company wants to invest in one of the following two projects because of the lack of funds to invest in both (the case of the money technicians) if you know that each of the projects costs 200 thousand dinars, and the cost of capital in the company 9% as the director of the company wishes a recovery period of 7 years, if the net cash flows in the interior of the two projects as follows: End of the year Cash flows inward Project A Project B 1 20000 25000 2 40000 25000 3 60000 25000 4 20000 25000 5 40000 25000 What is required is: Calculate the recovery period, the discounted recovery period for each project, which project you choose, and why?
Capital Budget Methods The private buildings company wants to invest in one of the following two projects because of the lack of funds to invest in both (the case of the money technicians) if you know that each of the projects costs 200 thousand dinars, and the cost of capital in the company 9% as the director of the company wishes a recovery period of 7 years, if the net cash flows in the interior of the two projects as follows: End of the year Cash flows inward Project A Project B 1 20000 25000 2 40000 25000 3 60000 25000 4 20000 25000 5 40000 25000 What is required is: Calculate the recovery period, the discounted recovery period for each project, which project you choose, and why?
Chapter9: Capital Budgeting Techniques
Section: Chapter Questions
Problem 8PROB
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Capital Budget Methods
The private buildings company wants to invest in one of the following two projects because of the lack of funds to invest in both (the case of the money technicians) if you know that each of the projects costs 200 thousand dinars, and the cost of capital in the company 9% as the director of the company wishes a recovery period of 7 years, if the net cash flows in the interior of the two projects as follows:
|
End of the year |
Cash flows inward Project A Project B |
|
|
1 |
20000 |
25000 |
|
2 |
40000 |
25000 |
|
3 |
60000 |
25000 |
|
4 |
20000 |
25000 |
|
5 |
40000 |
25000 |
What is required is: Calculate the recovery period, the discounted recovery period for each project, which project you choose, and why?
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