Assume a RM300,000 investment and the following cash flows for two products: Year Product X Product Y RM RM 70,000 80,000 90,000 1 80,000 95,000 105,000 125,000 2 3 4 95,000 Cost of capital is 12% Required: For each possible project you are required to calculate: (a) Accounting rate of return (ARR) (b) Payback Period PP) (c) Net Present Value (NPV)

Assume a RM300,000 investment and the following cash flows for two products: Year Product X Product Y RM RM 70,000 80,000 90,000 1 80,000 95,000 105,000 125,000 2 3 4 95,000 Cost of capital is 12% Required: For each possible project you are required to calculate: (a) Accounting rate of return (ARR) (b) Payback Period PP) (c) Net Present Value (NPV)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 21P

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