PBF-Assessment 4 [Due date: 7 January 2024]
[Topic 7a-Capital Budgeting]
A firm is considering two investment projects, Y and Z. These projects are NOT mutually
exclusive. Assume the firm is not capital constrained. The initial costs and cashflows for these
projects are:
(a) Using a discount rate of 9% calculate the net present value for each project. What decision
would you make based on your calculations? (4 marks)
(b) How would your decision change if the discount rate used for calculating the net present
value is 15%? (4 marks)
(c) Calculate an approximate IRR for each project. Assume the hurdle rate is 9%. What decision
would you make based on your calculations? (4 marks)
(d) Calculate the payback period for each project. The company looks to select investment projects
paying back in 2 years. What decision would you make based on your calculations? (3 marks)
(e) Critically discuss Net Present Value (NPV), Internal Rate of Return (IRR) and payback
period as criteria for investment appraisal. (10 marks)
Remark:
Submit to: Canvas Assignment [doc or pdf file]
Filename: Class — Name — Index Number [eg. L41 Robert Lee #100]
Y Z
0 -40,000 -28,000
1 17,000 12,000
2 17,000 12,000
3 15,000 20,000
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more