Question: QUESTION 3 (50 MARKS) 1) Explain briefly any two decisions criteria of capital project 2) Why capital budgeting is important for the firm? (6 marks)

QUESTION 3 (50 MARKS) 1) Explain briefly any two decisions criteria

QUESTION 3 (50 MARKS) 1) Explain briefly any two decisions criteria of capital project 2) Why capital budgeting is important for the firm? (6 marks) 3) What are the main weaknesses of Payback Period? (4 marks) (5 marks) 4) As finance manager, you are required to advise your boss on the following projected cash flows with the required rate of return is 12% per annum: MBF 1123 Year 0: (RM350 million) 1: RM50 million 2: RM70 million 3: RM80 million 4: RM100 million 5: RM120 million Calculate and make your decisions based on the following valuation methods: i) Payback Period (10 marks) ii) Net Present Value ( 15 marks) iii) Profitability Index (10 marks)

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