Year 2 Earnings Before Taxes Ebt In Project A Project B 75 000 225 000 125 000 175 000 150 000 150 000 200 000 50 00 1 (15.73 KiB) Viewed 24 times
a. Determine the Payback Period (PBP), Net Present Value (NPV) and Profitability Index (PI) of each project, assuming MRPL uses straight line method of depreciation, and the working life of each project is 5 years. Further, the tax rate applicable to MRPL is assumed at 15%.b. Rank and assess which project MRPL should invest in? Explain why. (10+10+5+5=30 marks)
a. Determine the Payback Period (PBP), Net Present Value (NPV) and Profitability Index (PI) of each project, assuming MRPL uses straight line method of depreciation, and the working life of each project is 5 years. Further, the tax rate applicable to MRPL is assumed at 15%.
b. Rank and assess which project MRPL should invest in? Explain why. (10+10+5+5=30 marks)
Year 2 Earnings before taxes (EBT) in $ Project A Project B 75,000 225,000 125,000 175,000 150,000 150,000 200,000 50,000 100,000 50,000 nin 3 4 5
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