Gerhana company is considering two mutually exclusive projects, X and Y. Project X costs 120,000 and is expected to generate RM65,000 in year one and RM75,000 in year two. Project Y costs RM190,000 and is expected to generate RM64,000 in year one, RM67,000 in year two, RM56,000 in year three, and RM45,000 in year four. The firm's required rate of return for these projects is 10%. i) For each project, draw a timeline that shows cash flow spent or received during the projects lives.

Gerhana company is considering two mutually exclusive projects, X and Y. Project X costs 120,000 and is expected to generate RM65,000 in year one and RM75,000 in year two. Project Y costs RM190,000 and is expected to generate RM64,000 in year one, RM67,000 in year two, RM56,000 in year three, and RM45,000 in year four. The firm's required rate of return for these projects is 10%. i) For each project, draw a timeline that shows cash flow spent or received during the projects lives.

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter9: Capital Budgeting Techniques

Section: Chapter Questions

Problem 11PROB

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