e company for all projects is 3 years. b) Calculate the net present value (NPV) for each project Note: No need excel formul

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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a) Calculate the payback period for each project. The maximum allowable payback period set
by the company for all projects is 3 years.

b) Calculate the net present value (NPV) for each project

Note: No need excel formula .

QUESTION 3
Fitch Industries is in the process of choosing the better of two equal-risk, mutually exclusive
capital expenditure projects-M and N. The relevant cash flows for each project are shown in
the following table. The firm's cost of capital is 14%.
Project M (RM)
Project N (RM)
Initial Investment (RM)
28,500
27,000
Year
Cash Flow (RM)
1
10,000
11,000
2
10,000
10,000
3
10,000
9,000
4
10,000
8,000
Transcribed Image Text:QUESTION 3 Fitch Industries is in the process of choosing the better of two equal-risk, mutually exclusive capital expenditure projects-M and N. The relevant cash flows for each project are shown in the following table. The firm's cost of capital is 14%. Project M (RM) Project N (RM) Initial Investment (RM) 28,500 27,000 Year Cash Flow (RM) 1 10,000 11,000 2 10,000 10,000 3 10,000 9,000 4 10,000 8,000
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