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Project A 20,000 20,000 20,000 20,000 Year Project B 4,600 6,200 8,000 10,600 Project C 11,200 8,600 6,600 1 2 3 4 The company's cost of capital is consist of debt after tax of 4% and cost of equity of 6%. la) Rank the projects based on THREE different analysis techniques : I Payback II. Net present value III. Internal rate of return Ib) Describe the process of capital budgeting

Project A 20,000 20,000 20,000 20,000 Year Project B 4,600 6,200 8,000 10,600 Project C 11,200 8,600 6,600 1 2 3 4 The company's cost of capital is consist of debt after tax of 4% and cost of equity of 6%. la) Rank the projects based on THREE different analysis techniques : I Payback II. Net present value III. Internal rate of return Ib) Describe the process of capital budgeting

Essentials Of Investments
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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QUESTION 1 Namelix Co. is considering which of three mutually exclusive projects it should undertake. The initial investment of Project A is RM 70,000, where the initial investment of Project B & C is RM20,000 respectively. Details of the projects' cash flows are given below. Project A 20,000 20,000 20,000 Project B 4,600 6,200 8,000 10,600 Project C 11,200 8,600 6,600 Year 1 20,000 The company's cost of capital is consist of debt after tax of 4% and cost of equity of 6%. la) Rank the projects based on THREE different analysis techniques : Payback Net present value III. Internal rate of return I. II. lb) Describe the process of capital budgeting. 234
Transcribed Image Text:QUESTION 1 Namelix Co. is considering which of three mutually exclusive projects it should undertake. The initial investment of Project A is RM 70,000, where the initial investment of Project B & C is RM20,000 respectively. Details of the projects' cash flows are given below. Project A 20,000 20,000 20,000 Project B 4,600 6,200 8,000 10,600 Project C 11,200 8,600 6,600 Year 1 20,000 The company's cost of capital is consist of debt after tax of 4% and cost of equity of 6%. la) Rank the projects based on THREE different analysis techniques : Payback Net present value III. Internal rate of return I. II. lb) Describe the process of capital budgeting. 234
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