- Question Abc Ltd Is Wondering Whether Or Not To Invest In One Of Two 2 Possible Projects The Initial Investment Will B 1 (48.19 KiB) Viewed 31 times
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Question ABC Ltd is wondering whether or not to invest in one of two(2) possible projects. The initial investment will be $10,000, and the cost of capital is 10 per cent. There is no scrap value for fixed assets used. Details of the net cash inflows are as follows: Project Year 0 1 2 3 4 5 N Net Cash Flows (10 000) 5 000 5 000 2000 1 600 P Net Cash Flows (10 000) 4 000 5000 3000 1 000 1 400 ii.) Required: Calculate for the two projects the i.) Payback period [4 marks] Accounting rate of return( assuming the cash flows represent profits) [4 marks] 111.) Net Present Value [6 marks) iv.) Internal Rate of Return. [6 marks] v.) Recommend which of the project to accept by the firm base on your assessment. [5 marks] [Total 25 marks]