6. a. A project has an investment proposal with the following characteristics: Period Cash outflows Cash inflows 0 Tk. 10,000 - 1 12,000 - 2 - Tk. 12,000 3 - 10,000 Compute the project’s profitability index using hurdle rate of 5 percent. Decide whether the project is acceptable or not. 05
6. a. A project has an investment proposal with the following characteristics:
Period
0 Tk. 10,000 -
1 12,000 -
2 - Tk. 12,000
3 - 10,000
Compute the project’s profitability index using hurdle rate of 5 percent. Decide
whether the project is acceptable or not. 05
b. ‘Gilford Mild Company’ is considering new product line to supplement its range
line. It is anticipated that the new line will involve cash investment of Tk.
500,000 at the initial time period and Tk. 600,000 in the 1st year. After-tax cash
inflows of Tk. 400,000 are expected in the 2nd year and Tk. 500,000 each year
thereafter through the 11th year. While the product line might be viable after the
11th year, the company prefers to be conservative and calculates at that time.
Determine
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