Rajawali Sdn Bhd has two potential projects with an initial cost of RM1,500,000. The capitalbudget for the year will only allow the company to accept one of the two projects.YearProject AProject B1RM400,000RM200,0002RM400,000RM400,0003RM400,000RM600,0004RM400,000RM400,000RM400,000RM1,000,000The cost of capital is 11%.(a) Calculate the following:i.Payback period for both projects.ii.Net present value for both projects.

Payback period = Years before full recovery + (Unrecovered cost/Cash flow during the year)

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.

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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