You have been asked to analyze two investment proposals, A and B. Project A’s cost is RM80,000 and the project’s B cost is RM100,000. Cash flows for both projects are as follows, and the required rate of return is 10%. YearCash Flows (RM)ACash Flows (RM)B120,00025,000225,00025,000320,00025,000425,00025,000530,00025,000 Based on the above information, calculate for A and B, the:1. Payback period 2. Net Present Value (NPV) 3. Internal Rate of Return 4. Discounted payback

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Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter26: Capital Investment Analysis

Section: Chapter Questions

Problem 4CMA

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You have been asked to analyze two investment proposals, A and B. Project A’s cost is RM80,000 and the project’s B cost is RM100,000. Cash flows for both projects are as follows, and the required rate of return is 10%.

Year	Cash Flows (RM) A	Cash Flows (RM) B
1	20,000	25,000
2	25,000	25,000
3	20,000	25,000
4	25,000	25,000
5	30,000	25,000

Based on the above information, calculate for A and B, the:

1. Payback period

2. Net Present Value (NPV)

3. Internal Rate of Return

4. Discounted payback

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