Calculate the payback period and discount payback period for each project. 3. Binaan Teguh Berhad (BTB) has two potential projects, Project A and Project B. Theforecasted cash flows and relevant information of the two projects are given below.YearCash Flow (forecasted)(RM’ million)Project AProject B15060280403804049020The internal rate of return (IRR) of Project A and Project B are 12 percent per year and 15percent per year respectively. Both projects require initial capital in year 0 and havingcost of capital of 5|percent per year.

Payback is the time period in which the initial capital is fully recovered from the future cash…

Binaan Teguh Berhad (BTB) has two potential projects, Project A and Project B. The forecasted cash flows and relevant information of the two projects are given below. Cash Flow (forecasted) (RM’ million) Year Project A 50 Project B 60 1 2 80 40 3 80 40 4 90 20 The internal rate of return (IRR) of Project A and Project B are 12 percent per year and 15 percent per year respectively. Both projects require initial capital in year 0 and having cost of capital of 5 percent per year.

Binaan Teguh Berhad (BTB) has two potential projects, Project A and Project B. The forecasted cash flows and relevant information of the two projects are given below. Cash Flow (forecasted) (RM’ million) Year Project A 50 Project B 60 1 2 80 40 3 80 40 4 90 20 The internal rate of return (IRR) of Project A and Project B are 12 percent per year and 15 percent per year respectively. Both projects require initial capital in year 0 and having cost of capital of 5 percent per year.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 3CMA

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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

Calculate the payback period and discount payback period for each project.

3. Binaan Teguh Berhad (BTB) has two potential projects, Project A and Project B. The
forecasted cash flows and relevant information of the two projects are given below.
Year
Cash Flow (forecasted)
(RM’ million)
Project A
Project B
1
50
60
2
80
40
3
80
40
4
90
20
The internal rate of return (IRR) of Project A and Project B are 12 percent per year and 15
percent per year respectively. Both projects require initial capital in year 0 and having
cost of capital of 5|percent per year.

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