Your first task as financial manager of the Reginald Corporation is to choose between two alternative projects for producing and marketing video cassettes. Project A requires an initial outlay of PKR 100mln and will generate annual cash flows of PKR 16mln during its 12-yr life. At that time, its salvage value will be PKR 48mln. Project B also requires an initial outlay of PKR 100mln, but will generate annual cash flows of PKR 17.5 mln during its 12-yr life. Its salvage value at the end of year 12 is estimated to be PKR 10mln. Your firm will use a 12% discount rate to value both projects. (a) Find NPV of both the projects. (b) Payback period of both the projects (c) Compute AROR of both the projects.
Q3: Your first task as
(a) Find NPV of both the projects.
(b) Payback period of both the projects
(c) Compute AROR of both the projects.
Step by step
Solved in 3 steps with 2 images