His time frame for this project is 5years. For these projects, sources of capital are come from a mix of capital structure (40% of debt and 60% of equity) to finance their projects cost. Cost of debt (before tax) is 14.98% and cost of equity 10%.

Tax rate = 30%.. The projects expected net cash flows are as

follows:)

YEA R	SEDA P	YUMMY
0	(RM150,000)	(RM170,000)
1	50,000	70,000
2	50,000	60,000
3	60,000	50,000
4	60,000	50,000
5	60,000	50,000

Management requires a minimum return of 15% in order for the project to be acceptable. Management requires projects with this type of risk to have a minimum payback of 2.0 years.

His decision will be on calculations for the payback method, the discounted payback method, net present value and internal rate of return in your analysis. Which project should the company consider, if this project is MUTUALLY exclusive project? (Hint: First determine weighted average cost of capital)