Question 2 a. Maa Lizzy is deciding whether to invest in a retail business. The relevant cash flows are expected to be a
Posted: Tue Jan 18, 2022 12:59 pm
Question 2 a. Maa Lizzy is deciding whether to invest in a retail business. The relevant cash flows are expected to be as follow: Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 GHS GHS GHS GHS GHS GHS Cash Flows (100,000) 20,000 60,000 30,000 15,000 10,000 Assume a cost of capital of 10%. Determine whether the project should be accepted or rejected using the following methods: i. Net Present Value NPV ii. Internal Rate of Return (IRR) iii. Discounted Payback Period [4 marks each) b. Discuss Three (3) advantages of Net Present Valuation method over the payback method of valuing investment. [3 marks) [Total: 15 marks] Question 3 Distinguish between the following i. Money Markets and Capital Markets [3 marks) ii. Primary Markets and Secondary Markets [3 marks) Operating Lease and Finance lease [3 marks) iv. Stock dividend and Stock Split [3 marks) Semi-strong form and strong form efficient market hypothesis [3 marks] [Total: 15 marks] 111. V.