Year Initial Investment 1 2 3 4 5 Project A 8000 2750 2750 2750 2750 2750 Project B 8000 3000 3000 3000 3000 3000 DISCOUNT RATE 5.05% Q1) Use the information below and help the management in choosing the most desirable Project using all the following techniques: 1) Payback Period Technique. 2) Discounted Payback Period Technique. 3) Net Present Value Technique 4) Profitability Index Technique. Q2) Based on your solution or answer to question 1, comment as to which proposal is better and why?
Year Initial Investment 1 2 3 4 5 Project A 8000 2750 2750 2750 2750 2750 Project B 8000 3000 3000 3000 3000 3000 DISCOUNT RATE 5.05% Q1) Use the information below and help the management in choosing the most desirable Project using all the following techniques: 1) Payback Period Technique. 2) Discounted Payback Period Technique. 3) Net Present Value Technique 4) Profitability Index Technique. Q2) Based on your solution or answer to question 1, comment as to which proposal is better and why?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Salalah company management is considering two competing investment Projects A and B.
Year
Initial Investment 1
2
3
4
5
Project A 8000 2750 2750 2750 2750 2750
Project B 8000 3000 3000 3000 3000 3000
DISCOUNT RATE 5.05%
Q1) Use the information below and help the management in choosing the most desirable Project using all the following techniques:
1) Payback Period Technique.
2) Discounted Payback Period Technique.
3)
4) Profitability Index Technique.
Q2) Based on your solution or answer to question 1, comment as to which proposal is better and why?
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