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Feasibility of the proposed project a and project b

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The JYX Deco Industries is specialize in interior decoration which comprises of wallpaper, curtains, vinyl flooring and carpeting is considering two new projects (Project A and Project B) for the upcoming year. Assume these projects are mutually exclusive and that the required rate of return is 10%. Given the following after-tax net cash flows:

Year                       Project A                          Project B

0                             -RM650                         -RM4,000

1                              800                                  5,500

-Evaluate the feasibility of the proposed project A and Project B by using capital budgeting techniques of Net Present value (NPV), Profitability Index and Internal Rate of Return (IRR).

-Explain the acceptability of these projects by considering with and without capital rationing constraint.

 

Reference no: EM132595915

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