Week 7 Giant Machinery Ltd is considering to invest in one of the two following Projects to

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Week 7

Giant Machinery Ltd is considering to invest in one of the two following Projects to buy a new equipment. Each project will last 5 years and have no salvage value at the end. The company's required rate of return for all investment projects is 9%. The cash flows of the projects are provided below.

Project 1 Project 2 Cost $175,000 $185,000

Required:

a) Identify which project should the company accept based on NPV method. (4 marks) (Note: Please

round up the result of each calculation of PV to 2 decimal places only for simplification)

b) Identify which project should the company accept based on simple pay back method if the payback criteria is maximum 2 years. (4 marks)

c) Which project Giant Machinery should choose if two methods are in conflict. (2 marks

Posted Date: May 19, 2024 05:14 PM

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Week 7 Giant Machinery Ltd is considering to invest in one of the two following Projects to

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