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Seagated Corp Sdn Bhd is considering two projects of machinery that perform the same task. The required rate of return for these projects is RM10%. The projects’ expected cash flows are as follows:   Year Machine A (RM) Machine B (RM) 0 (17,000) (17,000) 1 8,000 2,000 2 7,000 5,000 3 5,000 9,000 4 3,000 9,500            Based on the above information, you are required to make an analysis for the decision of Capital Budgeting based on the following techniques: 1) Net Present Value, NPV                                                     2) Profitability Index, PI

Seagated Corp Sdn Bhd is considering two projects of machinery that perform the same task. The required rate of return for these projects is RM10%. The projects’ expected cash flows are as follows:   Year Machine A (RM) Machine B (RM) 0 (17,000) (17,000) 1 8,000 2,000 2 7,000 5,000 3 5,000 9,000 4 3,000 9,500            Based on the above information, you are required to make an analysis for the decision of Capital Budgeting based on the following techniques: 1) Net Present Value, NPV                                                     2) Profitability Index, PI

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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Seagated Corp Sdn Bhd is considering two projects of machinery that perform the same task. The required rate of return for these projects is RM10%. The projects’ expected cash flows are as follows:

 

Year

Machine A (RM)

Machine B (RM)

0

(17,000)

(17,000)

1

8,000

2,000

2

7,000

5,000

3

5,000

9,000

4

3,000

9,500

          

Based on the above information, you are required to make an analysis for the decision of Capital Budgeting based on the following techniques:

1) Net Present Value, NPV                                                    

2) Profitability Index, PI                                                   

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