Rajawali Sdn Bhd has two potential projects with an initial cost of RM1,500,000. The capital budget for the year will only allow the company to accept one of the two projects. Year Project A Project B 1 RM400,000 RM200,000 RM400,000 RM400,000 3 RM400,000 RM600,000 4 RM400,000 RM400,000 5 RM400,000 RM1,000,000 The cost of capital is 11%. (a) Calculate the following: i. Payback period for both projects. ii. Net present value for both projects.
Rajawali Sdn Bhd has two potential projects with an initial cost of RM1,500,000. The capital budget for the year will only allow the company to accept one of the two projects. Year Project A Project B 1 RM400,000 RM200,000 RM400,000 RM400,000 3 RM400,000 RM600,000 4 RM400,000 RM400,000 5 RM400,000 RM1,000,000 The cost of capital is 11%. (a) Calculate the following: i. Payback period for both projects. ii. Net present value for both projects.
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 19EA: Redbird Company is considering a project with an initial investment of $265,000 in new equipment...
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![Rajawali Sdn Bhd has two potential projects with an initial cost of RM1,500,000. The capital
budget for the year will only allow the company to accept one of the two projects.
Year
Project A
Project B
1
RM400,000
RM200,000
2
RM400,000
RM400,000
3
RM400,000
RM600,000
4
RM400,000
RM400,000
RM400,000
RM1,000,000
The cost of capital is 11%.
(a) Calculate the following:
i.
Payback period for both projects.
ii.
Net present value for both projects.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3489a9a5-f92d-4208-804b-8c33b940491f%2Fc0412b50-5771-49f8-ac4e-b341ba94c0fe%2Fajjesra_processed.png&w=3840&q=75)
Transcribed Image Text:Rajawali Sdn Bhd has two potential projects with an initial cost of RM1,500,000. The capital
budget for the year will only allow the company to accept one of the two projects.
Year
Project A
Project B
1
RM400,000
RM200,000
2
RM400,000
RM400,000
3
RM400,000
RM600,000
4
RM400,000
RM400,000
RM400,000
RM1,000,000
The cost of capital is 11%.
(a) Calculate the following:
i.
Payback period for both projects.
ii.
Net present value for both projects.
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