Inzaghi Ltd is evaluating a capital expenditure proposal that has the following forecast cash flows: Original investment

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Inzaghi Ltd Is Evaluating A Capital Expenditure Proposal That Has The Following Forecast Cash Flows Original Investment 1 (160.89 KiB) Viewed 18 times

Inzaghi Ltd is evaluating a capital expenditure proposal that has the following forecast cash flows: Original investment £45,000 . 3 Cash flow: Year 1 Year 2e Year 32 £17,500 £25,000 £15,000 3 Scrap Value Discount rate 02 14% 4 Requirement a) Compute the net present value of the investment. 10 Marks b) Compute the proposal's internal rate of return and payback period. 10 Marks c) Compare and contrast the advantages and disadvantages of the net present value, the internal rate of return and the payback period as methods for investment appraisal. Should Inzaghi Ltd accept the capital expenditure proposal? Clearly explain your reasons.