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  3. a) bio sdn bhd is considering one of the two mutua

a) Bio Sdn Bhd is considering one of the two mutually exclusive projects, TI and...

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Accounting

  1. a) Bio Sdn Bhd is considering one of the two mutually exclusive projects, TI and TC. The companys discount rate is at 10 percent. The expected after-tax cash flows for both projects are as follows:

Year TI (RM) TC (RM)

0. (10,000) (17,000)

1 1,500 5,000

2 2,000 5,000

3 2,500 5,000

4 5,000 5,000

5 5,000 5,000

As the companys financial manager, you are required to:

i) Calculate the payback back period for project TI and TC.

ii) Calculate the Net Present Value for project TI and TC.

iii) Calculate the Internal rate of return for project TC only.

iv) Determine the best project that Bio Sdn Bhd should invest into. Justify your answer.

b) Explain any two (2) criteria that should be considered in making decision under capital budgeting.

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