question archive Techno barns would like to invest in new chain of barns, which will require a $650,000 initial cash outlay of project A and $500,000 for project B
Techno barns would like to invest in new chain of barns, which will require a $650,000 initial cash outlay of project A and $500,000 for project B
Subject:FinancePrice: Bought3
Techno barns would like to invest in new chain of barns, which will require a $650,000 initial cash outlay of project A and $500,000 for project B. The barn chain is expected to provide after-tax annual cash savings of $170,000 in year 1, $150,000 in year 2, $250,000 in year 3 and $300,000 in year 4. The required rate of return of restaurant chain is 15 percent. Required: bi. Calculate Pay Back Period for both projects. Should the project be accepted if management require PBP of 3 years? (6) bj. Calculate the Net Present Value of both projects. If Project B is dependent on Project A. Should it be accepted? (7) bk. Calculate Internal Rate of Return of project A. (5) bl. Calculate Pro?tability Index of both projects.
