Majan Company considers to appraise two projects. The cost of capital is 8%. The Initial investment in Project A is OMR 42,000 and in Project B is OMR 36,000. The cash flows for the projects are as follows: You are required to: 1. Explain which project should be considered if the Majan Company want to recover the initial investment in less than 4 years’ time. 2. If Majan Company wants to appraise projects according to the current value of cash explain which project should be considered by Majan LLC in terms of current value.
Majan Company considers to appraise two projects. The cost of capital is 8%. The Initial investment in Project A is OMR 42,000 and in Project B is OMR 36,000. The cash flows for the projects are as follows: You are required to: 1. Explain which project should be considered if the Majan Company want to recover the initial investment in less than 4 years’ time. 2. If Majan Company wants to appraise projects according to the current value of cash explain which project should be considered by Majan LLC in terms of current value.
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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Majan Company considers to appraise two projects. The cost of capital is 8%. The Initial investment in Project A is OMR 42,000 and in Project B is OMR 36,000. The cash flows for the projects are as follows:
You are required to:
1. Explain which project should be considered if the Majan Company want to recover the initial investment in less than 4 years’ time.
2. If Majan Company wants to appraise projects according to the current value of cash explain which project should be considered by Majan LLC in terms of current value.
Transcribed Image Text:Project A
Project B
Year
Cash Flows
Cash Flows
8000
13000
2
10000
13000
14000
12000
4000
12000
12000
12000
4.
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