Question: PLEASE ASAP QUESTION 2 (20 MARKS) a) YEAR CASH FLOW 0 -472,500 1 32,000 2 97,000 3 102,000 4 301,000 i. Compute Payback period of

PLEASE ASAP

QUESTION 2 (20 MARKS)

a)

YEAR CASH FLOW 0 -472,500 1 32,000 2 97,000 3 102,000 4 301,000

i. Compute Payback period of this project. (5 marks) ii. If the company pre-set limit is 4 years, should it accept? (2 marks)

Continued ...

DFN5114 FUNDAMENTAL OF FINANCE 1 9TH MARCH 2021

Page 10 of 10

b) HSR Berhad is presented with the following two projects. The required rate of return is 14.5 percent.

YEAR PROJECT M PROJECT N 0 -145,000 -350,000 1 63,000 155,000 2 81,000 175,000 3 72,000 140,000 4 58,000 105,000

i. What is the Net Present Value (NPV) for each project? (10 marks) ii. Which project/s should the company accept? (3 marks)

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