Assume you are the new financial manager of the bed mattress firm Fairy Tale Lullaby Ltd. The firm has always used payback period and accounting rate of return to appraise new investments. With your trusty copy of Corporate Finance to hand, you believe that other methods may be more appropriate for the firm.

Write a report to the owners of Fairy Tale Lullaby reviewing the different methods that can be used in investment appraisal, together with their strengths and weaknesses. Comment on any practical issues that Fairy Tale Lullaby may face in implementing these methods. (50 marks)