QUESTION 1

Your first assignment in your new position as an assistant financial analyst at Delalang Berhad (DLB) is to evaluate three new capital-budgeting proposals. Because this is your first assignment, you have been asked not only to provide a recommendation, but also to respond to number of questions aimed at judging your understanding of the capital budgeting process.

The expected cash flows from each project are as follows:

Cash flows	Project Daun Kesom	Project Daun Sirih	Project Daun Kunvit
Initial investment	RM 100,700	RM 100,700	RM 100,700
Cash inflows, vears 1-5	RM 32,500	RM 31,500	RM 30,000

In evaluating these projects, please respond to the following questions.

1. What is the Payback Period for each project? (3 Marks)

2. Based on your answer in part (a), if DLB imposes a 3-year maximum acceptable payback period, which of this projecUs should be accepted if these projects are independent project. Explain your answer. (2 Marks)

3. Based on your answer in part (a), which of this projecUs should be accepted if these projects are mutually exclusive project. Explain your answer. (2 Marks)

4. Determine the Net Present Value for each project assuming a 13 per cent required rate of return on these projects. (4 Marks)

5. Based on your answer in part (d), which of this projecUs should be accepted if these projects are an independent project. Explain your answer. (2 Marks)

6. Based on your answer in part (d), which of this projecUs should be accepted if these projects are mutually exclusive project. Explain your answer. (2 Marks)

(Total: 15 Marks)