3 228 MBA5903 OCTOBER/NOVEMBER 2018 Question [14 Marks] Consider the following information for two mutually exclusive projects undertaken by Lovers Food Market Annual Cash Flows Year B -R30 000 -R60 000 0 1 20 000 10 000 A 3yrs B 391 2 20 000 10 000 a 3 10 000 20 000 4 10 000 20 000 5 10 000 20 000 Lovers requires a 14 percent rate of return on projects of this nature Required: 41 42 Calculate the NPV of both projects Calculate the profitability index of both projects Calculate the payback period on both projects Which of the two projects, If either, should Lovers accepts and why? well [4] [4] [4] [2] 43 44