To receive partial credit, you need to show relevant work for all numerical questions (the...
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Accounting
To receive partial credit, you need to show relevant work for all numerical questions (the steps for solutions)
Al-Alis firm is considering two projects and the cash flows associated with them are shown in the following table. The firm has set its cost of capital at 11 %
| Year | Project A | Project B |
| 0 | - SR 200 | - SR 200 |
| 1 | 80 | 100 |
| 2 | 80 | 100 |
| 3 | 80 | 100 |
| 4 | 80 |
|
4- Compute the Profitability Index (PI) for each project?
|
| Project A | Project B |
| Profitability Index (PI) |
|
|
5- In light of your answers above, suppose that these two projects might be mutually exclusive or independent. According to these two assumptions, fill in the blanks in the table below with the suitable answer:
| Points | Investment Criteria | If A and B are mutually exclusive, then I would select | If A and B are independent, then I would select |
| PBP |
|
| |
| NPV |
|
| |
| IRR |
|
| |
| PI |
|
|
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