Homework Help is Here – Start Your Trial Now!
Business
Finance
Cocoa Company is evaluating an investment shown below. The investment will acquire an initial investment of RM 50,000. The cost of capital is 11 percent and the cash inflows are as follows:- Year Main Complex 1 RM 15,000 2 RM 10,000 3 RM 12,500 4 RM 15,000 5 RM 30,000 Based on the above information, calculate for Cocoa Company: i. Payback period  ii. Net Present Value (NPV)  iii. Profitability index

Cocoa Company is evaluating an investment shown below. The investment will acquire an initial investment of RM 50,000. The cost of capital is 11 percent and the cash inflows are as follows:- Year Main Complex 1 RM 15,000 2 RM 10,000 3 RM 12,500 4 RM 15,000 5 RM 30,000 Based on the above information, calculate for Cocoa Company: i. Payback period  ii. Net Present Value (NPV)  iii. Profitability index

Essentials Of Investments
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
See similar textbooks
icon
Related questions
Question

Cocoa Company is evaluating an investment shown below. The investment will acquire an initial investment of RM 50,000. The cost of capital is 11 percent and the cash inflows are as follows:-

Year Main Complex
1 RM 15,000
2 RM 10,000
3 RM 12,500
4 RM 15,000
5 RM 30,000
Based on the above information, calculate for Cocoa Company:
i. Payback period 
ii. Net Present Value (NPV) 
iii. Profitability index

b. After calculating the first investment, Cocoa Company found another investment.
Project B costs RM1,120,000 and having payback period of 3.50 years, discounted
payback period of 4.44 years, Net Present Value (NPV) of RM 460,000 and Profitability
Index of 1.41. Which project would you recommend considering all?

Expert Solution
steps

Step by step

Solved in 4 steps with 1 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Capital Budgeting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS