Question: Part B Eucalyptus Sdn. Bhd. has shortlisted three projects to be implemented in year 2021. All projects involve an initial investment of RM550,000. Project A

Part B Eucalyptus Sdn. Bhd. has shortlisted three projects to be implemented in year 2021. All projects involve an initial investment of RM550,000. Project A is expected to bring stream of cash inflows for five years. Project B has a three-year expected cash flow streams, while Project C is expected to bring four years of cash flow streams. The company's cost of capital is 12%. The estimated cash inflows from the three projects are as follows: Year 1 2 3 4 5 Project RM"000 200 200 200 300 300 Project B RM'000 300 300 300 Project C RM'000 400 100 200 200 Required: a) Rank the three projects in order of acceptability using payback period, net present value (NPV) and internal rate of return (IRR). Explain why the methods produce different rankings. (13 marks) b) Suppose the projects are independent and indivisible, and that the company has up to RM1,200,000 to invest, which project(s) should the company invest in? (2 marks) [TOTAL: 25 MARKS)
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