Question
Question 1: Salalah Methanol company management is considering three competing investment Projects A,B &C Year Project...
Question 1: Salalah Methanol company management is considering three competing investment Projects A,B &C
|
Year |
Project A |
Project B |
Project C |
|
Initial Investment |
10000 |
10000 |
10000 |
|
1 |
1100 |
4160 |
6225 |
|
2 |
3100 |
5260 |
8250 |
|
3 |
3800 |
7360 |
9275 |
|
4 |
4600 |
9460 |
9300 |
|
Assume a discount Rate of 5.05% |
|||
Use the information below and help the management in choosing the most desirable Project using Net Present value and Profitability Index.
Solution: Net Present value
Formula:
Project A
Project B
Project C
Solution: Profitability Index
Formula:
Project A
Project B
Project C
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Internal
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Project
Investment
Required
Net
Present
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the
Project
(years)
Internal
Rate
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must ration the funds among four competing projects. Selected
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Investment
Required
Net
Present
Value
Life of
the
Project
(years)
Internal
Rate
of Return
A
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308,074
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B
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$
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