Question

• Rank the following investment projects in order of
the profitability according to (a) payback period
method and (b) Net Present Value, assuming cost
of capital to be 10%
Investment
Annual Cash Inflow
Expected ute
Project X
40,000
3,000
8 Years
Project Y
20,000
8,000
5 Years

Answer 1

Answer:

Rank the following investment projects in order of

the profitability according to (a) payback period

method and (b) Net Present Value, assuming cost

of capital to be 10%

Investment

Annual Cash Inflow

Expected ute

Project X

40,000

3,000

8 Years