Question: A company evaluating 3 projects as shown in Table 2. Initially, the company invests RM28.542 million for each project, i.e. Project A, Project B and

A company evaluating 3 projects as shown in Table

A company evaluating 3 projects as shown in Table 2. Initially, the company invests RM28.542 million for each project, i.e. Project A, Project B and Project C. During the first year, Project A generates RM3 million; Project B generates RM21 million and Project C generates RM13.5 million. Subsequently, the revenues for following years are as shown in Table 2. Determine the ranking of these three projects on the basis of the evaluation criteria of Net Present Value (NPV), Payback and Profitability Index (PI). The firm's cost of capital, i = 10%. (20 marks) Table 27 Jadual 2 Year 1 Tahun Project A/ Projek Project B / Projek Project CI Projek A B (RMX 1,000,000) (RMX 1,000,000) (RMX 1,000,000) 0 -28.542 -28.542 -28.542 1 3 21 13.5 15 15 13.5 27 3 13.5

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