A with a total investment value of Rp. 500,000,000,- The ect is 5 years old. Based on the calculation the total present value of Rp. 56,000,000, B with a total investment value of Rp. 600,000,000, The t is 5 vears old Based on the caloulation of the present is (ears res

Principles of Accounting Volume 2
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Chapter11: Capital Budgeting Decisions
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3. It is known that PT. Nikisae is currently facing 2 investment projects with the
following data:
a. Project A with a total investment value of Rp. 500,000,000,- The
project is 5 years old. Based on the calculation of the preset
value, the total present value of Rp. 56,000,000,
b. Project B with a total investment value of Rp. 600,000,000,- The
project is 5 years old. Based on the cal culation of the present value,
the total present value of Rp. 670,000,000,
c. Question:
a) If the company applies the Net Present Value method, which
projects should be implemented? Explain why.
b) If the company applies the Profitability Index method, which
project should be chosen? Explain why.
c) If the company has sufficient funding, what is the
investment decision? Explain why.
Transcribed Image Text:3. It is known that PT. Nikisae is currently facing 2 investment projects with the following data: a. Project A with a total investment value of Rp. 500,000,000,- The project is 5 years old. Based on the calculation of the preset value, the total present value of Rp. 56,000,000, b. Project B with a total investment value of Rp. 600,000,000,- The project is 5 years old. Based on the cal culation of the present value, the total present value of Rp. 670,000,000, c. Question: a) If the company applies the Net Present Value method, which projects should be implemented? Explain why. b) If the company applies the Profitability Index method, which project should be chosen? Explain why. c) If the company has sufficient funding, what is the investment decision? Explain why.
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