3. Company A has three projects (C, D and E) which showpositive NPV. But Company does not have enough moneyto invest in all three projects. So, it decides by themanagement to know which project increases financialposition of the company.ParticularInitialCashCashCashRisk freeRiskSinvestmentinflowsinflowsinflowsratepremium(OMR)1st year(OMR)2nd year(ОMR)3rdyearProject C56, 00025, 00010, 00015, 0002%5%Project D50, 00032, 00012, 00041, 0002%4%Project E85, 00012, 00030, 00053, 0003%7%Required:Calculate NPV with risk-adjusted discount rate and giveyour recommendation to the company management. (2marks)

Net Present Value = Present value of cash inflows - Initial investment Risk adjusted discount rate…

3. Company A has three projects (C, D and E) which show positive NPV. But Company does not have enough money to invest in all three projects. So, it decides by the management to know which project increases financial position of the company. Particular Initial Cash Cash Cash Risk free Risk investment inflows inflows inflows rate premium (OMR) 1st year (OMR) 2nd (OMR) year 3rd year Project C 56, 000 25, 000 10, 000 15, 000 2% 5% Project D 50, 000 32, 000 12, 000 41, 000 2% 4% Project E 85, 000 12, 000 30, 000 53, 000 3% 7% Required: Calculate NPV with risk-adjusted discount rate and give your recommendation to the company management. (2 marks)

3. Company A has three projects (C, D and E) which show positive NPV. But Company does not have enough money to invest in all three projects. So, it decides by the management to know which project increases financial position of the company. Particular Initial Cash Cash Cash Risk free Risk investment inflows inflows inflows rate premium (OMR) 1st year (OMR) 2nd (OMR) year 3rd year Project C 56, 000 25, 000 10, 000 15, 000 2% 5% Project D 50, 000 32, 000 12, 000 41, 000 2% 4% Project E 85, 000 12, 000 30, 000 53, 000 3% 7% Required: Calculate NPV with risk-adjusted discount rate and give your recommendation to the company management. (2 marks)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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