2. ABAVIC Co Ltd is considering embarking upon a project which is expected to improve its...

 

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2. ABAVIC Co Ltd is considering embarking upon a project which is expected to improve its financial position but it's confronted with a choice among TWO competing project options. The estimated dates and cash flows of two projects are as follows. Period(Year) 0 a) b) c) 1 2 3 4 5 6 7 8 9 10 Project A (C) (5000) 900 900 900 900 900 900 900 900 900 900 Project B (C) (5000) 700 800 900 1000 1100 1200 1300 1400 1500 1600 Help A BABVIC Co Itd makes a decision on which project to be selected under each of the following criteria: the Payback period, (8marks) the net present value assuming a cost of capital of 12% (12marks) the Internal rate of return (IRR) (10 marks) 2. ABAVIC Co Ltd is considering embarking upon a project which is expected to improve its financial position but it's confronted with a choice among TWO competing project options. The estimated dates and cash flows of two projects are as follows. Period(Year) 0 a) b) c) 1 2 3 4 5 6 7 8 9 10 Project A (C) (5000) 900 900 900 900 900 900 900 900 900 900 Project B (C) (5000) 700 800 900 1000 1100 1200 1300 1400 1500 1600 Help A BABVIC Co Itd makes a decision on which project to be selected under each of the following criteria: the Payback period, (8marks) the net present value assuming a cost of capital of 12% (12marks) the Internal rate of return (IRR) (10 marks)

Answer rating: 100% (QA)

Answer Formulas Used Payback Period B2B3 5C2SUMC3C7C8 Net Present value NPV... View the full answer