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1 . RAK Investments plc is looking to take on a new investment. The company will evaluate two mutually exclusive projects, whose details are given

1. RAK Investments plc is looking to take on a new investment. The company will evaluate two mutually exclusive projects, whose details are given below. The companys cost of capital is 9%.
BD Millions Project A Project B
Initial Investment (105)(128)
Year 14080
Year 25060
Year 36050
Year 45020
Year 57510
Calculate the Payback period
Calculate the Net Present Value (NPV) of both projects
Calculate the Internal Rate of Return (IRR) of both projects (12 marks)
2b. Critically discuss the merits of each investment appraisal method, then discuss the result of the evaluations you have made of the two projects and advise the company which project should be undertaken (10 marks)
marks)

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