You are financial analyst for the XYZ company. The director has asked you to analyze two proposed capital investments, Project A and Project B. Each project has a cost of RM 10, 000, and the cost of capital for each project is 12 percent. The project s’ cash flows are as follows: Year Project A Project B 0 (10,000) (10,000) 1 6500 3500 2 3000 3500 3 3000 3500 4 1000 3500 Question 1: Calculate each project’s NPV. Question 2: Which project or projects should be accepted?
You are financial analyst for the XYZ company. The director has asked you to analyze two proposed capital investments, Project A and Project B. Each project has a cost of RM 10, 000, and the cost of capital for each project is 12 percent. The project s’ cash flows are as follows: Year Project A Project B 0 (10,000) (10,000) 1 6500 3500 2 3000 3500 3 3000 3500 4 1000 3500 Question 1: Calculate each project’s NPV. Question 2: Which project or projects should be accepted?
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter26: Capital Investment Analysis
Section: Chapter Questions
Problem 4CMA
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You are financial analyst for the XYZ company. The director has asked you to analyze two proposed capital investments, Project A and Project B. Each project has a cost of RM 10, 000, and the cost of capital for each project is 12 percent. The project s’ cash flows are as follows:
| Year | Project A | Project B |
| 0 | (10,000) | (10,000) |
| 1 |
6500 |
3500 |
| 2 |
3000 |
3500 |
| 3 |
3000 |
3500 |
| 4 |
1000 |
3500 |
Question 1: Calculate each project’s NPV.
Question 2: Which project or projects should be accepted?
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