The P&G Pakistan is a big and mature company. Most of business graduates look to work in it. Company periodically hires internees for period of 6 months on trial basis. Suppose you are selected as an internee. The Financial has given you following data to test your finance skills. Year Project A Project B Project C 0 (170,000) (18,000) 20,000 1 11,000 10,000 7,000 2 24,000 6,000 7,000 3 25,000 10,000 7,000 4 380,000 8,000 7,000 If you apply the IRR criterion, which project will you choose? If you apply profitability index criterion, which investment would you choose? Why?
The P&G Pakistan is a big and mature company. Most of business graduates look to work in it. Company periodically hires internees for period of 6 months on trial basis. Suppose you are selected as an internee. The Financial has given you following data to test your finance skills. Year Project A Project B Project C 0 (170,000) (18,000) 20,000 1 11,000 10,000 7,000 2 24,000 6,000 7,000 3 25,000 10,000 7,000 4 380,000 8,000 7,000 If you apply the IRR criterion, which project will you choose? If you apply profitability index criterion, which investment would you choose? Why?
Chapter15: Capital Structure Decisions
Section: Chapter Questions
Problem 1dM
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The P&G Pakistan is a big and mature company. Most of business graduates look to work in it. Company periodically hires internees for period of 6 months on trial basis. Suppose you are selected as an internee. The Financial has given you following data to test your finance skills.
|
Year |
Project A |
Project B |
Project C |
|
0 |
(170,000) |
(18,000) |
20,000 |
|
1 |
11,000 |
10,000 |
7,000 |
|
2 |
24,000 |
6,000 |
7,000 |
|
3 |
25,000 |
10,000 |
7,000 |
|
4 |
380,000 |
8,000 |
7,000 |
- If you apply the IRR criterion, which project will you choose?
- If you apply profitability index criterion, which investment would you choose? Why?
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