1. Project Publishing has generated cash of RM23,780 in the first 3 years, RM24,800 in year 4 and RM25,908 in the next 2 years. While Project Entertainment has generated cash as follow: Year Cash Flow (RM)1 - 2 19,8093 - 5 24,7906 - 7 28,450The initial cost for Project Entertainment and Project Publishing are RM120,809 andRM116,570 respectively. The required rate of return for Project Entertainment is 10percent and Project Publishing is 7 percent. Based on the information above, calculate for both division:
(a) Payback period
(b) Net present value
(c) Profitability index
(d) Evaluate the acceptability of each proposed division dictated by each measure and indicate which project would be recommend with a reason.
2. Mr. Danial Daud is the owner of Radial Manufacture Sdn Bhd that supplies the equipment to public schools in Klang Valley and he is considering expanding his product line under three projects: stationary, uniform and furniture. The following cashflows for uniform:Year Cash Flow1 RM50,0002 RM40,0003 RM30,0004 RM10,0005 RM6,700Stationary will generate cash of RM56,708 annually for six years and furniture will generate annual cash of RM39,099 for eight years. The initial outlay for stationary, uniform and furniture are RM278,050, RM122,000 and RM230,900 respectively. The required rate of return for uniform and furniture are 7 percent, while stationary is 5percent.Based on the information above, calculate for each project in the following: CONFIDENTIAL
(a) Payback period
(b) Net present value
(c) Profitability index
(d) Internal rate of return
(e) Evaluate the acceptability of each proposed project dictated by each measure and indicate which project would be recommend with a reason. 
1. Capital budgeting is a process a firm uses to make decisions concerning investmentsin the long-term assets of the firm. Discuss the importance of capital budgeting in the company financial decision.
2. Capital expenditure decisions are of considerable significance to the firm as the future success and growth of the firm depends heavily on capital budgeting approach. Unfortunately, it is not easy to take. Explain the application of capital budgeting into the business and the difficulties of firm in the capital budgeting process.
3. Capital budgeting allows managers to use method to allocate scarce capital to such investments in the most value accretive manner. Elaborate how the firm manage the capital budgeting decision.

Answer rating: 100% (QA)

1 a Pay back period Project Publishing Pay back period Initial Cost Annual Cash Flow 116 570 23 780 24 800 25 9 08 116 570 74 488 1 56 years Project Entertainment Pay back period Initial Cost Annual C... View the full answer