Question 1 : Assume you are the finance manager of Almanor Company , and the company is considering investing in one of the three projects . The life for both the Projects X , M and Project Y is 5 years . Project X costs OMR . 20500 , Project M costs OMR . 20500 and Project Y costs OMR.20500 . The discount rate / cost of capital is 4.15 % . Required : Use the following techniques to help company to decide which Machine is better and justify why ? A) Payback period B) Discount payback period C) Net Present Value D) Present value index -Profitability index. Year Project X Project M Project Y 1 7865 3748 8752 2 4567 7609 8393 3 9676 4628 4508 4 7292 8905 7836 5 9900 9904 8287
Question 1 : Assume you are the finance manager of Almanor Company , and the company is considering investing in one of the three projects . The life for both the Projects X , M and Project Y is 5 years . Project X costs OMR . 20500 , Project M costs OMR . 20500 and Project Y costs OMR.20500 . The discount rate / cost of capital is 4.15 % . Required : Use the following techniques to help company to decide which Machine is better and justify why ? A) Payback period B) Discount payback period C) Net Present Value D) Present value index -Profitability index. Year Project X Project M Project Y 1 7865 3748 8752 2 4567 7609 8393 3 9676 4628 4508 4 7292 8905 7836 5 9900 9904 8287
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question 1 :
Assume you are the finance manager of Almanor Company , and the company is considering investing in one of the three projects . The life for both the Projects X , M and Project Y is 5 years . Project X costs OMR . 20500 , Project M costs OMR . 20500 and Project Y costs OMR.20500 . The discount rate / cost of capital is 4.15 % .
Required : Use the following techniques to help company to decide which Machine is better and justify why ?
A) Payback period
B) Discount payback period
C)
D) Present value index -Profitability index.
| Year | Project X | Project M | Project Y |
| 1 | 7865 | 3748 | 8752 |
| 2 | 4567 | 7609 | 8393 |
| 3 | 9676 | 4628 | 4508 |
| 4 | 7292 | 8905 | 7836 |
| 5 | 9900 | 9904 | 8287 |
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