6.2. A firm expects the following stream of cash flows from its project of N$500,000 per annum for 5 years. The projects initial costs are N$1.0 million and companys cost of capital is 10%. Determine whether the company should take this project or not using NPV. (10)

6.3. Mrs. Simataa is evaluating a new project for her firm, Basket Wonders (BW). A firm expects the following stream of cash flows from its project of N$500,000 per annum for 5 years. The projects initial costs are N$1.5 million.

a. Find the PI When evaluating the discount rate is 10%? (5).

b. Should this project be accepted? (2)

c. When evaluating the NPV at the rate of 10% and 32 % they found the following values: Evaluate the Internal Rate of return (IRR)? (6)

6.4. A company has the following profits from a project over a five-year period; N$2000, N$1500, N$2200, N$1200 and N$4000. The initial investment is N$20,000. The companys target accounting rate is 19%.

(a) Find the ARR. (5)

(b) Can this project be Accepted or Rejected? (2)