Zaher Khan Ltd is a pharmaceutical company that has a limited amount of capital to invest...

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Zaher Khan Ltd is a pharmaceutical company that has a limited amount of capital to invest into the development of a new sports supplement. The marketing team has done extensive market research and has recommended to the board that only one product can be developed, released and marketed. Information regarding the next forecasted net cash flows from each product is presented below. Initial Capital (Outflow) Cash Inflows Year 1 Year 2 Year 3 Year 4 Year 5 Gen X R14 000 000 Gen Y R14 000 000 R2 200 000 R3 950 000 R3 080 000 R2 250 000 R2 200 000 R4 350 000 R1 350 000 R2 430 000 R850 000 R3 050 000 The marketing team has further suggested that the product that is chosen should be discontinued at the end of its fourth year because of the outdated technology used in the development of the product. Zaher Khan's discount rate (WACC) is 14% and the corporate tax rate is 28%. Zaher Khan's executive committee would like either of the products to pay themselves off within the first four year. Evaluate the two (2) investment opportunities and recommend, with justification, which product Zaher Khan Ltd should accept, if any. Your answer should include the following: Q.4.1 Please help me with the payback period calculation Q.4.2 Please help me with the NPV calculation Q.4.3 Recommendation as well as motivation Zaher Khan Ltd is a pharmaceutical company that has a limited amount of capital to invest into the development of a new sports supplement. The marketing team has done extensive market research and has recommended to the board that only one product can be developed, released and marketed. Information regarding the next forecasted net cash flows from each product is presented below. Initial Capital (Outflow) Cash Inflows Year 1 Year 2 Year 3 Year 4 Year 5 Gen X R14 000 000 Gen Y R14 000 000 R2 200 000 R3 950 000 R3 080 000 R2 250 000 R2 200 000 R4 350 000 R1 350 000 R2 430 000 R850 000 R3 050 000 The marketing team has further suggested that the product that is chosen should be discontinued at the end of its fourth year because of the outdated technology used in the development of the product. Zaher Khan's discount rate (WACC) is 14% and the corporate tax rate is 28%. Zaher Khan's executive committee would like either of the products to pay themselves off within the first four year. Evaluate the two (2) investment opportunities and recommend, with justification, which product Zaher Khan Ltd should accept, if any. Your answer should include the following: Q.4.1 Please help me with the payback period calculation Q.4.2 Please help me with the NPV calculation Q.4.3 Recommendation as well as motivation

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Q41 Payback Period Calculation The payback period is the length of time required for an investment to generate cash flows sufficient to recover the in... View the full answer