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  3. question 21 ithmaar holding b.s.c. (bahrain bourse

QUESTION 21 Ithmaar Holding B.S.C. (Bahrain Bourse, #ITHMRS) is considering two independent projects that have...

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QUESTION 21 Ithmaar Holding B.S.C. (Bahrain Bourse, #ITHMRS) is considering two independent projects that have the following cash flows. Year Project A Project B 0 $-22,000 $ -60,000 1 5,000 15,000 2 6,000 25,000 3 7,000 35,000 Discount rate 9% 10% a) If Ithmaar Holding uses the Net Present Value (NPV) method to choose between projects, which project(s) will be accepted? Why? (2 marks) b) Calculate the Internal Rate of Return (IRR) of the accepted project (2 marks) c) Calculate the Profitability Index (PI) of the accepted project (1 mark) Note: You are allowed to use Financial Calculator For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). T

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