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There are two projects, X and Y. Each project requires an investment of $20,000. The Company’s WACC is 10%.              Net profit before depreciation and after tax Years Project X Project Y 1 4,000 5000 2 6,000 7000 3 8,000 9000 4 10000 11000 5 12000 12000   You are required to rank these projects according to the pay back method and NPV from the above information using discounted cash flow. Advice the company’s management on the choice of the project

There are two projects, X and Y. Each project requires an investment of $20,000. The Company’s WACC is 10%.              Net profit before depreciation and after tax Years Project X Project Y 1 4,000 5000 2 6,000 7000 3 8,000 9000 4 10000 11000 5 12000 12000   You are required to rank these projects according to the pay back method and NPV from the above information using discounted cash flow. Advice the company’s management on the choice of the project

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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  1. There are two projects, X and Y. Each project requires an investment of $20,000. The Company’s WACC is 10%.

             Net profit before depreciation and after tax

Years

Project X

Project Y

1

4,000

5000

2

6,000

7000

3

8,000

9000

4

10000

11000

5

12000

12000

 

You are required to rank these projects according to the pay back method and NPV from the above information using discounted cash flow. Advice the company’s management on the choice of the project

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