a company is considering two mutually exclusive projects. Both require an initial cash outlay of Rs.20000 each, and have a life of five years. The company's required rate of return is 10% and pays tax at a 35% rate. The projects will be depreciated on a straight line basis. The before taxes cash flows expected to be generated by the projects are as follows. Before tax cash flows (Rs.) Project A - 1 2 3 4 5 is 8000 8000 8000 8000 8000 Project B - 1 2 3 4 5 is 12000 6000 4000 10000 10000 Calculate for each project : the NPV and the internal rate of return. Which project should be accepted and why.
a company is considering two mutually exclusive projects. Both require an initial cash outlay of Rs.20000 each, and have a life of five years. The company's required rate of return is 10% and pays tax at a 35% rate. The projects will be depreciated on a straight line basis. The before taxes cash flows expected to be generated by the projects are as follows. Before tax cash flows (Rs.) Project A - 1 2 3 4 5 is 8000 8000 8000 8000 8000 Project B - 1 2 3 4 5 is 12000 6000 4000 10000 10000 Calculate for each project : the NPV and the internal rate of return. Which project should be accepted and why.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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a company is considering two mutually exclusive projects. Both require an initial cash outlay of Rs.20000 each, and have a life of five years. The company's required
Project A - 1 2 3 4 5 is 8000 8000 8000 8000 8000
Project B - 1 2 3 4 5 is 12000 6000 4000 10000 10000
Calculate for each project : the NPV and the
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