Calculate the Payback period   2. Calculate the Net Present Value (NPV) of both projects   3. Calculate the Internal Rate of Return (IRR) of both projects   4. Critically discuss the merits of each investment appraisal method, then discuss the result of the evaluations you have made of the two projects and advise the company which project should be undertaken

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
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Mf4.

 1. Calculate the Payback period

 

2. Calculate the Net Present Value (NPV) of both projects

 

3. Calculate the Internal Rate of Return (IRR) of both projects

 

4. Critically discuss the merits of each investment appraisal method, then discuss the result of the evaluations you have made of the two projects and advise the company which project should be undertaken

 

 

Question 3
ZebraToon plc is looking to take on a new investment. The company will evaluate two mutually
exclusive projects, whose details are given below. The company's cost of capital is 12%.
SAR Millions
Initial Investment
Year 1
Year 2
Year 3
Year 4
Year 5
Project A
(150)
40
50
60
60
85
Project B
(152)
80
60
50
40
30
Transcribed Image Text:Question 3 ZebraToon plc is looking to take on a new investment. The company will evaluate two mutually exclusive projects, whose details are given below. The company's cost of capital is 12%. SAR Millions Initial Investment Year 1 Year 2 Year 3 Year 4 Year 5 Project A (150) 40 50 60 60 85 Project B (152) 80 60 50 40 30
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