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A company is thinking of investing in one of two potential new products for sale. The projections are as follows: Year Revenue/cost (Product A) Revenue/cost
A company is thinking of investing in one of two potential new products for sale. The projections are as follows: Year Revenue/cost (Product A) Revenue/cost (Product B) a) Calculate the payback period for both products in years and months (2 marks) b) Calculate NPV of both products assuming a discount rate of 9% (6 marks) c) Which product should be chosen and why? (2 marks) d) Calculate the IRR for Product A only using 1% and 20% to 1d.p. (4 marks) e) Outline the advantages and disadvantages of the NPV and IRR including the citing of sources. (6 marks)
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