Solution-Determine the best equipment for prince corp

Determine the best equipment for prince corp

Reference no: EM133111410

Prince Corp. is considering two mutually exclusive equipment for their business activities. The two alternatives equipment provides the following set of after tax net cash flows:

	Equipment A (RM)	Equipment B (RM)
Initial Outlay	80,000	90,000
Inflow year 1	0	30,000
Inflow year 2	0	30,000
Inflow year 3	0	30,000
Inflow year 4	160,000	30,000
Inflow year 5	0	30,000

The required rate of return for this corp. is 14 percent.

1. Calculate and determine the best equipment for Prince Corp. under the following techniques:

Payback Period
Net Present Value
Profitability Index
Internal Rate of Return

2. Based on all of the above techniques, advise Prince Corp. on the best equipment to invest. Provide well explanation on your suggestion.

Reference no: EM133111410

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Determine the best equipment for prince corp

Reference no: EM133111410

Reference no: EM133111410

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