Reference no: EM132583526
You are the Chief Financial Analyst of Faisal Assets Management Company with CFA qualification and one of your regular client Dawood Habib Construction company, which is a famous Construction company in all around Pakistan. They are going to evaluate two Long Term Construction projects in Karachi for this year for which they need your consulting services, Your Financial Analyst team has already calculated their WACC which is 14% they just wanted you to evaluate the projects again as to maintain the legacy of company. Habib's After-Tax Cash flows including depreciation are as follow,
Time period DHA-8 Project DHA-3 Project
0 Initial cost Initial cost
1 $ 2,000 $ 5,600
2 $ 2,000 $ 5,600
3 $ 2,000 $ 5,600
4 $ 2,000 $ 5,600
5 $ 2,000 $ 5,600
DHA-8 project initial cost -2600 (negative value)
DHA-3 project initial cost -11500 (negative value)
what to find:
Question 1: Calculate NPV, IRR, Payback and Discounted payback period for two projects.
Question 2: Assuming the projects are independent, which one would you recommend?
Question 3: If the projects are mutually exclusive which would you recommend?
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