Answer Happy

Question 2 a) You are considering the following two mutually exclusive projects. The required return on each project is 12 percent. Year 0 1 2 3 Cash Flow Project A RM -75,000 32,400 30,200 36,600 Cash Flow Project B RM -38,000 17,800 14,200 19,800 Determine which project should the firm accept if the company applies Continued...

ii. i. the profitability index (PI) decision rule. (5 marks) the net present value (NPV) decision rule. (5 marks) Given your first two answers, identify which project you should accept and the reason for that decision (2 marks) ili. E