# M/s Sons & Sons is considering

M/s Sons & Sons is considering two projects, A & B, with cash flows as shown below:

 period Cash Flow of Project A Project B 0 -90,000 -150,000 1 30,000 72,000 2 30,000 35,000 3 30,000 40,000 4 30,000 25,000

1. Calculate discounted payback period, net present value and internal rate of return for each project using opportunity cost of capital 13 % & 9% for project A & B respectively.
2. Which project(s) should be accepted if :

(i)         The projects are mutually exclusive and there is no capital constraint.

(ii)        The projects are independent and there is no capital constraint.

(iii)       The projects are independent and there is a total of \$100,000 of financing for capital outlays in the coming period.

c. Why the cost of capital for A might be higher than for B. State possible reason(s)

# M/s Sons & Sons is considering

M/s Sons & Sons is considering two projects, A & B, with cash flows as shown below:

 period Cash Flow of Project A Project B 0 -90,000 -150,000 1 30,000 72,000 2 30,000 35,000 3 30,000 40,000 4 30,000 25,000

1. Calculate discounted payback period, net present value and internal rate of return for each project using opportunity cost of capital 13 % & 9% for project A & B respectively.
2. Which project(s) should be accepted if :

c. Why the cost of capital for A might be higher than for B. State possible reason(s

# M/s Sons & Sons is considering

M/s Sons & Sons is considering two projects, A & B, with cash flows as shown below:

 period Cash Flow of Project A Project B 0 -90,000 -150,000 1 30,000 72,000 2 30,000 35,000 3 30,000 40,000 4 30,000 25,000
• Calculate discounted payback period, net present value and internal rate of return for each project using opportunity cost of capital 13 % & 9% for project A & B respectively.
• Which project(s) should be accepted if :

(i)         The projects are mutually exclusive and there is no capital constraint.

(ii)        The projects are independent and there is no capital constraint.

(iii)       The projects are independent and there is a total of \$100,000 of financing for capital outlays in the coming period.

• Why the cost of capital for A might be higher than for B. State possible reason(s)

(show the calculations & formula on word/excel)

# M/s Sons & Sons is considering

Q No. 3: M/s Sons & Sons is considering two projects, A & B, with cash flows as shown below:

 period Cash Flow of Cash Flow of Project A Project B 0 -90,000 -150,000 1 30,000 72,000 2 30,000 35,000 3 30,000 40,000 4 30,000 25,000

1. Calculate discounted payback period, net present value and internal rate of return for each project using opportunity cost of capital 13 % & 9% for project A & B respectively.
2. Which project(s) should be accepted if :

(i)  The projects are mutually exclusive and there is no capital constraint.

(ii) The projects are independent and there is no capital constraint.

(iii) The projects are independent and there is a total of \$100,000 of financing for capital outlays in the coming period.

3. Why the cost of capital for A might be higher than for B. State possible reason(s)

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