Question: FIN220 SEM 181 Bashar & Co. is evaluating 2 (TWO) mutually exclusive investment projects. Both projects will incur an initial capital outlay of SAR200,000 for

 FIN220 SEM 181 Bashar & Co. is evaluating 2 (TWO) mutually

FIN220 SEM 181 Bashar & Co. is evaluating 2 (TWO) mutually exclusive investment projects. Both projects will incur an initial capital outlay of SAR200,000 for Project A and SAR150,000 for Project B. The company's required rate of return is 8% and sets 4 years as its minimum payback penod Information about cash flows from the project for the next four years are tabulated below Yeaf Project A 50,000 80,000 Project EB 30,000 70,000 Based on the information given; a. Calculate payback period for both projects. Show your calculations. (4 marks) b. Calculate Net Present Value for each of the project. Show your calculations. (6 marks) C. Evaluate profitability index for each of the project. Show your calculation. (4 marks) d. Based on your calculations for payback period, NPV (Net Present Value and Pl (Profitability Index) value, which project should be accepted by Bashar&Co.? Justify your answer. (2 marks)

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