Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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XXX Sdn Bhd is in the process of choosing the better of two equal-risk, mutually exclusive
capital expenditure projects—M and N. The relevant cash flows for each project are shown in
the following table. The maximum allowable payback period for the project is 4 years.
Project A (RM) Project B (RM)
Initial Investment (RM) 28,500 27,000
Year Cash Flow (RM)
1 11,500 11,000
2 11,500 10,000
3 11,500 9,000
4 11,500 8,000
a. Calculate the modified payback period for each project.
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