Reference no: EM132996801

Question - Mr. Billy Santos wants to invest his hard earned money. As an initial step, he observe 2 companies he thinks best to invest. Mr. Santos shortlisted 2 company for his investment option and analyze their financial performance. The companies are ABC corporation and XYZ incorporated, their capital are 150,000 and 180,000 respectively. ABC corporation's 5 years revenues are 84,000.00; 86,500.00; 89,500.00; 92,300.00 & 97,200.00. While XYZ incorporated revenues are 106,000.00; 115,800.00; 97,400.00; 98,900.00 & 98,500.00. ABC and XYZ incorporated incurred operational expenses of 3,000 & 4,250 on the first year of operation. Both company's expenses grow at a rate of 5% & 4% per annum respectively. The cost of capital for two company are 8% & 10% and also taxable of 28%. The expected return of investment for each company is 14% & 12% respectively. Compute the company net income?