1. Juran Engineering Industries wishes to buy an excavator for a five (5) year project between the Tata and Red. Expecte

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1 Juran Engineering Industries Wishes To Buy An Excavator For A Five 5 Year Project Between The Tata And Red Expecte 1 (65.15 KiB) Viewed 13 times

1. Juran Engineering Industries wishes to buy an excavator for a five (5) year project between the Tata and Red. Expected cash flows given in the Table Q1 below. Table Q1 Projects / Cash Flow (RM) Year Red Tata (1,616,000) 0 (556,000) 1 550,000 200,000 2 500,000 200,000 3 500,000 210,000 4 500,000 200,000 5 801,000 256,000 a) Calculate the discount factor and hence the Net Present Value based on an interest rate of 15%. By using NPV technique, which proposal should the Juran Engineering Industries invest? Clarify your answer. b) Calculate the Payback Period for Tata and Red. Which project do you accept? Clarify your answer.