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Salalah Methanol company management is considering three competing investment Projects
Option1: Starting a unit in Sohar,
Option 2: Starting a unit in Musandam and
Option 3: Starting a unit in Muscat
The intial investment for all the projects are 15000 and the cost of capital is 5.005%
| Year | Sohar | Musandam | Muscat |
| 1 | 1100 | 2160 | 3225 |
| 2 | 3100 | 3260 | 4250 |
| 3 | 3800 | 4360 | 5475 |
| 4 | 4600 | 5460 | 6300 |
| 5 | 5100 | 6900 | 7000 |
Use the information below and help the management in choosing the most desirable Project using
a. Payback period
b. Discounted payback
c. Net Present value
d. Profitability Index.
You have to comment and suggest to the management which project to choose and why and projects they should not choose at all at any cost
Answer & Explanation
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