Year Initial Investment 1 2 3 4 5 Project A 8000 2750 2750 2750 2750 2750 Project B 8000 3000 3000 3000 3000 3000 DISCOUNT RATE 5.05% Q1) Use the information below and help the management in choosing the most desirable Project using all the following techniques: 1) Payback Period Technique. 2) Discounted Payback Period Technique. 3) Net Present Value Technique 4) Profitability Index Technique. Q2) Based on your solution or answer to question 1, comment as to which proposal is better and why?
Year Initial Investment 1 2 3 4 5 Project A 8000 2750 2750 2750 2750 2750 Project B 8000 3000 3000 3000 3000 3000 DISCOUNT RATE 5.05% Q1) Use the information below and help the management in choosing the most desirable Project using all the following techniques: 1) Payback Period Technique. 2) Discounted Payback Period Technique. 3) Net Present Value Technique 4) Profitability Index Technique. Q2) Based on your solution or answer to question 1, comment as to which proposal is better and why?
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter10: The Basics Of Capital Budgeting: Evaluating Cash Flows
Section: Chapter Questions
Problem 23SP: Start with the partial model in the file Ch10 P23 Build a Model.xlsx on the textbooks Web site....
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Question
Salalah company management is considering two competing investment Projects A and B.
Year
Initial Investment 1
2
3
4
5
Project A 8000 2750 2750 2750 2750 2750
Project B 8000 3000 3000 3000 3000 3000
DISCOUNT RATE 5.05%
Q1) Use the information below and help the management in choosing the most desirable Project using all the following techniques:
1) Payback Period Technique.
2) Discounted Payback Period Technique.
3)
4) Profitability Index Technique.
Q2) Based on your solution or answer to question 1, comment as to which proposal is better and why?
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