The Laguna Property Berhad is considering two mutually exchsive investments 5 years from now. The investments...

 

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The Laguna Property Berhad is considering two mutually exchsive investments 5 years from now. The investments involved two new cities development namely as I-City and V-City. The following are the expected cash flow : Expected Cash Flow (million) T-City Year V-City -300 -550 1 150 -120 150 350 3 150 200 4 150 350 5 150 150 The expected cost of capital for both projects are 13% Based on the table above: a) Construct NPV profiles for both projects of I-City and V-City. Ckearly show the cakulation for each period. (10 Marks) b) Cakuate the payback period and discounted payback period for both projects and justify your answer. (6 Marks) c) Cakulate the Profitability Index for both projects. (4 Marks) d) Cakulate Modified Internal Rate of Retum for both projects using excel (shows the screenshot of the process of deriving the answer). (2 Marks) e) Based on question a), b), c) and d), explin which project shoukl be accepted by Laguna Property Berhad to invest. (3 Marks) The Laguna Property Berhad is considering two mutually exchsive investments 5 years from now. The investments involved two new cities development namely as I-City and V-City. The following are the expected cash flow : Expected Cash Flow (million) T-City Year V-City -300 -550 1 150 -120 150 350 3 150 200 4 150 350 5 150 150 The expected cost of capital for both projects are 13% Based on the table above: a) Construct NPV profiles for both projects of I-City and V-City. Ckearly show the cakulation for each period. (10 Marks) b) Cakuate the payback period and discounted payback period for both projects and justify your answer. (6 Marks) c) Cakulate the Profitability Index for both projects. (4 Marks) d) Cakulate Modified Internal Rate of Retum for both projects using excel (shows the screenshot of the process of deriving the answer). (2 Marks) e) Based on question a), b), c) and d), explin which project shoukl be accepted by Laguna Property Berhad to invest. (3 Marks)

Answer rating: 100% (QA)

a b According to the payback period and discounted payback period ICity pays faster than VCity ... View the full answer