Reference no: EM132582320

Fatima is the project manager for Construction Company. Given below is the information tender for two projects. If Fatima has Standard Operating Procedure(SOP) cost of capital for every project is 10% and the priority to select the mutually exclusive project is by payback period with consideration of time value of money.

Year                       A                                    B

0                   (100,000)               (100,000)

1                     60,000                      50,000

2                       40,000                     30,000

3                       12,000                      30,000

4                        2,000                      20,000

5                          16,000                       -

Fatima to

Question a) Determine the payback period for each project

Question b) Determine the net present value(NPV) and Profitability Index (PI)

Question c) Compute the discounted payback period.

Question d) Which project should he invest if the projects are independent? Explain why.

Question e) Which project should he invest if the projects are mutually exclusive? Explain why.