A company is considering two mutually exclusive investments with a discount rate of 10%. The cash flows of the projects over time follows: Time Project A Project B 0 - RM300,000 - RM405,000 1 - RM387,000 RM134,000 2 - RM193,000 RM134,000 3 - RM100,000 RM134,000 4 RM600,000 RM134,000 5 RM600,000 RM134,000 6 RM850,000 RM134,000 7 - RM180,000 RM0 Question: The company does not want to issue new share capital or debentures to finance this project. Recommend three (3) appropriate financing methods for this project. Provide support for your recommendations.
A company is considering two mutually exclusive investments with a discount rate of 10%. The cash flows of the projects over time follows: Time Project A Project B 0 - RM300,000 - RM405,000 1 - RM387,000 RM134,000 2 - RM193,000 RM134,000 3 - RM100,000 RM134,000 4 RM600,000 RM134,000 5 RM600,000 RM134,000 6 RM850,000 RM134,000 7 - RM180,000 RM0 Question: The company does not want to issue new share capital or debentures to finance this project. Recommend three (3) appropriate financing methods for this project. Provide support for your recommendations.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A company is considering two mutually exclusive investments with a discount rate of 10%.
The
| Time | Project A | Project B |
| 0 | - RM300,000 | - RM405,000 |
| 1 | - RM387,000 | RM134,000 |
| 2 | - RM193,000 | RM134,000 |
| 3 | - RM100,000 | RM134,000 |
| 4 | RM600,000 | RM134,000 |
| 5 | RM600,000 | RM134,000 |
| 6 | RM850,000 | RM134,000 |
| 7 | - RM180,000 | RM0 |
Question:
The company does not want to issue new share capital or debentures to finance
this project. Recommend three (3) appropriate financing methods for this project.
Provide support for your recommendations.
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