Answer Happy

Question 1 (5 marks): Assume you are the finance manager of Almanor Company, and the company is considering investing in one of the three projects. The life for both the Projects X, M and Project Y is 5 years. Project X costs OMR. 20500, Project M costs OMR. 20500 and Project Y costs OMR.20500. The discount rate/cost of capital is 4.15%. Required: Use the following techniques to help company to decide which Machine is better and justify why? a) Payback period b) Discount payback period c) Net Present Value d) Present value index - Profitability index. Year 1 2 3 4 5 Project X 7865 4567 9676 7292 9900 Project M 3748 7609 4628 8905 9904 Project Y 8752 8393 4508 7836 8287