(0)

The management of Nadia Investors has to make a choice between two projects: Project Intensive and Project Primary. Each project will require an initial investment of R2 500 000.

INFORMATION

Project Intensive

Net profits

Year 1- R80000

year 2- R180000

year 3- 120000

year 4- 220000

year 5- 50000

Project Primary

Net profits

Year 1 - R130000

year 2 - R130000

year 3 - R130000

year 4 - R130000

year 5 - R130000

A scrap value of R100 000 is expected for Project Intensive. Depreciation is calculated on the straightline basis. The required rate of return is 15%.

REQUIRED:

Use the information provided above to calulate the following:

PaybackPeriodforProjectIntensive(answer in years,months days)