Q3c: Your first task as financial manager of the Reginald Corporation is to choose between two alternative projects for producing and marketing video cassettes. Project A requires an initial outlay of PKR 100mln and will generate annual cash flows of PKR 16mln during its 12-yr life. At that time, its salvage value will be PKR 48mln. Project B also requires an initial outlay of PKR 100mln, but will generate annual cash flows of PKR 17.5 mln during its 12-yr life. Its salvage value at the end of year 12 is estimated to be PKR 10mln. Your firm will use a 12% discount rate to value both projects. (a) Find IRR of both the projects to the nearest tenth of a percent. (b) Please explain which project should you choose and why?
Q3c: Your first task as
(a) Find
(b) Please explain which project should you choose and why?
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