There are two projects, X and Y. Each project requires an investment of $20,000. The Company’s WACC is 10%. Net profit before depreciation and after taxYearsProject XProject Y14,000500026,000700038,00090004100001100051200012000 You are required to rank these projects according to the pay back method and NPV from the above information using discounted cash flow. Advice the company’s management on the choice of the project

Answered: There are two projects, X and Y. Each…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 6PA: There are two projects under consideration by the Rainbow factory. Each of the projects will require...

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There are two projects, X and Y. Each project requires an investment of $20,000. The Company’s WACC is 10%.

Net profit before depreciation and after tax

Years	Project X	Project Y
1	4,000	5000
2	6,000	7000
3	8,000	9000
4	10000	11000
5	12000	12000

You are required to rank these projects according to the pay back method and NPV from the above information using discounted cash flow. Advice the company’s management on the choice of the project

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