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Bumi Hijau Properties is in the process of deciding to develop an apartment project in Shah...

Bumi Hijau Properties is in the process of deciding to develop an apartment project in Shah Alam. The initial outlay for both projects is RM480,000. The cost of capital is 12%. Below are the expected cash flows from the two projects.

Year

Suria Apartment Project

(RM)

Puncak Apartment Project (RM)

1

180,000

165,000

2

210,000

190,000

3

180,000

260,000

4

310,000

345,000

5

278,000

310,000

Required:

  1. Based on the above information, you are required to calculate:
    1. Payback period for both projects
    2. Net present value (NPV) for both projects.
    3. Profitability index for both projects
  2. Which project should be accepted and why? Please state your reason.

Solutions

Expert Solution

jeff jeffy answered 2 years ago
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