Part A Blue Ltd has provided the following figures for two investment projects, only one of which may be chosen. Project

[answerhappygod]

Part A Blue Ltd Has Provided The Following Figures For Two Investment Projects Only One Of Which May Be Chosen Project 1 (57.86 KiB) Viewed 93 times

Part A Blue Ltd has provided the following figures for two investment projects, only one of which may be chosen. Project X Project Y £ Initial outlay 200,000 180,000 Profit for year 1 2 3 4 60,000 30,000 20,000 10,000 15,000 20,000 45,000 60,000 Estimated resale value at end of year 4 40,000 4,000 Profit is calculated after deducting straight line depreciation. The business has a cost of capital of 10% I Required a) Calculate the payback period, net present value, accounting rate of return and the internal rate of return for each project, and provide brief recommendations as to what project needs to be chosen based on the following: i. The Payback Period. ii. The Accounting Rate of Return/Return on Capital Employed. iii. The Net Present Value. iv. The Internal Rate of Return (to two decimal places) (25 marks) b) Critically evaluate the benefits and limitations of each of the different investment appraisal techniques (25 marks)