Assume you are the finance manager of Almanor Company, and the company is considering investing in one of the three projects. The life for both the Projects X, M and Project Y is 5 years. Project X costs OMR. 20500, Project M costs OMR. 20500 and Project Y costs OMR.20500. The discount rate/cost of capital is 4.15%. Required: Use the following techniques to help company to decide which Machine is better and justify why? a) Payback period b) Discount payback period Net Present Value d) Present value index -Profitability index. Year Project X Project M 3748 Project Y 7865 2 8752 4567 7609 8393 3. 9676 4628 4. 4508 7292 8905 7836 0066 8287 Ctrl) -

Assume you are the finance manager of Almanor Company, and the company is considering investing in one of the three projects. The life for both the Projects X, M and Project Y is 5 years. Project X costs OMR. 20500, Project M costs OMR. 20500 and Project Y costs OMR.20500. The discount rate/cost of capital is 4.15%. Required: Use the following techniques to help company to decide which Machine is better and justify why? a) Payback period b) Discount payback period Net Present Value d) Present value index -Profitability index. Year Project X Project M 3748 Project Y 7865 2 8752 4567 7609 8393 3. 9676 4628 4. 4508 7292 8905 7836 0066 8287 Ctrl) -

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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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Assume you are the finance manager of Almanor Company, and the company is
considering investing in one of the three projects. The life for both the Projects X,
M and Project Y is 5 years. Project X costs OMR. 20500, Project M costs OMR.
20500 and Project Y costs OMR.20500. The discount rate/cost of capital is 4.15%.
Required: Use the following techniques to help company to decide which
Machine is better and justify why?
a)
Payback period
b)
Discount payback period
c)
Net Present Value
d)
Present value index -Profitability index.
Year
Project X
Project M
Project Y
7865
3748
8752
4567
7609
8393
3.
9676
4628
4508
7292
8905
7836
9904
0066
8287
(Ctrl) -
45

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