QUESTION 1 Peace Industries is in the process of choosing the exclusive capital expenditure projects, Gold...

 

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QUESTION 1 Peace Industries is in the process of choosing the exclusive capital expenditure projects, Gold and Silver. Year Project Gold (RM) Project Silver (RM) 0 (8,500) (7,500) 1 3,000 2,000 2 2,000 1,000 3 3,000 2,000 4 7,000 5,000 5 8,000 6,000 Note: The required rate of return is 11%. a) Based on the free cash flow information above, calculate the discounted payback period for each project. (10 Marks) b) If the maximum acceptable discounted payback period is four years, identify projects would be accepted by Peace Industries. Justify your answer. c) Calculate the net present value (NPV) for each project. (2.5 Marks) (10 Marks) d) Based on the calculated NPV, identify the project will be selected by the company. Justify your answer. (2.5 Marks) QUESTION 1 Peace Industries is in the process of choosing the exclusive capital expenditure projects, Gold and Silver. Year Project Gold (RM) Project Silver (RM) 0 (8,500) (7,500) 1 3,000 2,000 2 2,000 1,000 3 3,000 2,000 4 7,000 5,000 5 8,000 6,000 Note: The required rate of return is 11%. a) Based on the free cash flow information above, calculate the discounted payback period for each project. (10 Marks) b) If the maximum acceptable discounted payback period is four years, identify projects would be accepted by Peace Industries. Justify your answer. c) Calculate the net present value (NPV) for each project. (2.5 Marks) (10 Marks) d) Based on the calculated NPV, identify the project will be selected by the company. Justify your answer. (2.5 Marks)