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Calculate the payback period for the projects

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Reference no: EM133035826

QUESTION - TT Biotech Son Bhd is in the process of expansion it business operation. Provided below is the after tax cash flow for both projects.

Year

Project A RM

Project B RM

0

50,000

47,000

1

15,000

20,000

2

15,000

(10,000)

3

15,000

15,000

4

15,000

14,000

5

15,000

20,000

The cost of capital is 10% and the projects are mutually exclusive.

a) Calculate the followings: i) Payback period for the projects.

ii) Net Present Value (NPV) for the projects.

iii) Based on NPV, which project should be selected and state your reasons.

Reference no: EM133035826

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