SAMPLE QUESTION You are the financial manager for Banko Investment Company Limited. Your company is deciding...

 

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SAMPLE QUESTION You are the financial manager for Banko Investment Company Limited. Your company is deciding between two mutually exclusive projects, X and Y to invest in. The following are details regarding both projects. Initial Investment Net Cash Flows: Year 1 Year 2 Year 3 Year 4 Year 5 Project X (GH¢) 2,000,000 500,000 200,000 350,000 600,000 400,000 Project Y (GH¢) 2,000,000 a. Calculate the Payback Period for both projects. b. Calculate the NPV for both projects. 300,000 500,000 650,000 1,000,000 1,500,000 Banko Limited's discount rate for any investment project is 10%. Required: c. Calculate Profitability index for both projects. d. Calculate the Internal rate of return for both projects. e. Advise Management based on your calculations above on which of the two projects Banko Limited should invest in. Provide relevant reasons to support your answer. SAMPLE QUESTION You are the financial manager for Banko Investment Company Limited. Your company is deciding between two mutually exclusive projects, X and Y to invest in. The following are details regarding both projects. Initial Investment Net Cash Flows: Year 1 Year 2 Year 3 Year 4 Year 5 Project X (GH¢) 2,000,000 500,000 200,000 350,000 600,000 400,000 Project Y (GH¢) 2,000,000 a. Calculate the Payback Period for both projects. b. Calculate the NPV for both projects. 300,000 500,000 650,000 1,000,000 1,500,000 Banko Limited's discount rate for any investment project is 10%. Required: c. Calculate Profitability index for both projects. d. Calculate the Internal rate of return for both projects. e. Advise Management based on your calculations above on which of the two projects Banko Limited should invest in. Provide relevant reasons to support your answer.

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1Calculation of payback period Upto 4 years project X has recovered 165 lakhs Balance to be recovere... View the full answer