Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text:A)
Consider the following two mutually exclusive projects:
Cash flow (A)
-RM300,000
20,000
50,000
50,000
390,000
i)
ii)
Year
0
1
2
3
4
Cash flow (B)
-RM40,000
19,000
12,000
18,000
10,500
If you apply the payback criterion, which investment will you choose if you
set the maximum payback period of 3 years?
If you apply the internal rate of return (IRR) criterion, which investment will
you choose, if you require a 15% return?
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