Question Number - 06 JLK Construction company has Rs. 11,000,000 to invest in one of the Project which has been shown as below. Managing Director needs the investment option which will make sure the fast recovery of investment. By the way, Finance Manager is interested in better return on investment after adjustment with inflation and fast recovery after inflationary effects. Human Resource Manager is interested in investing in where any project has any excess cash flow over the initial investment after the inflationary effects is adjusted. Further Marketing Manager is in an opinion that that IRR should be acceptable more than others. The expected cash flows are shown as below. Project - A (Rs.000s) Project - B (Rs.000s) Project- C (Rs.000s) Year - 01 1000 3000 5000 Year - 02 2000 3000 4000 Year - 03 3000 3000 3000 Year 04 4000 3000 2000 Year - 05 5000 3000 1000 Based on the above information, you are required to address the board of management in resp ing to the concerns of each manager and propose a suitable option to make the vestr nt. Expected inflationary and risk factor are 9% and 2% respectively.
Question Number - 06 JLK Construction company has Rs. 11,000,000 to invest in one of the Project which has been shown as below. Managing Director needs the investment option which will make sure the fast recovery of investment. By the way, Finance Manager is interested in better return on investment after adjustment with inflation and fast recovery after inflationary effects. Human Resource Manager is interested in investing in where any project has any excess cash flow over the initial investment after the inflationary effects is adjusted. Further Marketing Manager is in an opinion that that IRR should be acceptable more than others. The expected cash flows are shown as below. Project - A (Rs.000s) Project - B (Rs.000s) Project- C (Rs.000s) Year - 01 1000 3000 5000 Year - 02 2000 3000 4000 Year - 03 3000 3000 3000 Year 04 4000 3000 2000 Year - 05 5000 3000 1000 Based on the above information, you are required to address the board of management in resp ing to the concerns of each manager and propose a suitable option to make the vestr nt. Expected inflationary and risk factor are 9% and 2% respectively.
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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Transcribed Image Text:Question Number - 06
JLK Construction company has Rs. 11,000,000 to invest in one of the Project which has been
shown as below. Managing Director needs the investment option which will make sure the fast
recovery of investment. By the way, Finance Manager is interested in better return on
investment after adjustment with inflation and fast recovery after inflationary effects. Human
Resource Manager is interested in investing in where any project has any excess cash flow over
the initial investment after the inflationary effects is adjusted. Further Marketing Manager is in
an opinion that that IRR should be acceptable more than others. The expected cash flows are
shown as below.
Project- A
(Rs.000s)
Project - B
Project- C
(Rs.000s)
(Rs.000s)
Year - 01
1000
3000
5000
Year 02
2000
3000
4000
Year - 03
3000
3000
3000
Year - 04
4000
3000
2000
Year 05
5000
3000
1000
Based on the above information, you are required to address the board of management in
res ing to the concerns of each manager and propose a suitable option to make the
vestr nt. Expected inflationary and risk factor are 9% and 2% respectively.
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