CML Investment Ltd evaluating three mutually exclusive investment projects. Cash flows associated with these three projects...
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CML Investment Ltd evaluating three mutually exclusive investment projects. Cash flows associated with these three projects have given below. Year Initial Cashflow Year 1 Year 2 Year 3 Year 4 Year 5 X (81,200) 35,000 28,750 Project Y 36,625 Z (182,000) 46,625 46,625 46,625 46,625 46,625 (84,000) 18,125 20,000 18,750 17,750 46,000 The company expect 9% return on similar project. You are required to estimate the net present value, profitability index and the payback period of each project. CML Investment Ltd evaluating three mutually exclusive investment projects. Cash flows associated with these three projects have given below. Year Initial Cashflow Year 1 Year 2 Year 3 Year 4 Year 5 X (81,200) 35,000 28,750 Project Y 36,625 Z (182,000) 46,625 46,625 46,625 46,625 46,625 (84,000) 18,125 20,000 18,750 17,750 46,000 The company expect 9% return on similar project. You are required to estimate the net present value, profitability index and the payback period of each project.
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Answer rating: 100% (QA)
To calculate the net present value NPV profitability index PI and payback period for each project we need to discount the cash flows using the companys expected return of 9 Project X Year 0 81200 Year ... View the full answer
Related Book For
Foundations of Finance The Logic and Practice of Financial Management
ISBN: 978-0132994873
8th edition
Authors: Arthur J. Keown, John D. Martin, J. William Petty
Posted Date:
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