Stargate Corporation is considering two projects of machinery that perform the same task. The required rate of return for these projects is RM10%. The projects' expected cash flows are as follows: 自 T Machine ZA (RM) (17,000) 2,000 5,000 9,000 9,500 Machine MIR (RM) (17,000) 8,000 Year 1 2 7,000 5,000 3,000 4 Based on the above information, you are required to make an analysis for the decision of Capital Budgeting based on the following techniques: (a) Net Present Value, NPV (b) Profitability Index, PI

Cornerstones of Cost Management (Cornerstones Series)
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Author:Don R. Hansen, Maryanne M. Mowen
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Chapter19: Capital Investment
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Stargate Corporation is considering two projects of machinery that perform the same task. The
required rate of return for these projects is RM10%. The projects' expected cash flows are as
follows:
Machine MIR (RM)
(17,000)
8,000
7,000
5,000
3,000
Machine ZA (RM)
(17,000)
2,000
5,000
Year
1
3
9,000
9,500
4
Based on the above information, you are required to make an analysis for the decision of
Capital Budgeting based on the following techniques:
(a)
Net Present Value, NPV
(b)
Profitability Index, PI
Transcribed Image Text:Stargate Corporation is considering two projects of machinery that perform the same task. The required rate of return for these projects is RM10%. The projects' expected cash flows are as follows: Machine MIR (RM) (17,000) 8,000 7,000 5,000 3,000 Machine ZA (RM) (17,000) 2,000 5,000 Year 1 3 9,000 9,500 4 Based on the above information, you are required to make an analysis for the decision of Capital Budgeting based on the following techniques: (a) Net Present Value, NPV (b) Profitability Index, PI
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