a$)$ Identify and outline briefly the main methods of capital investment appraisal, including

discounted payback period.

$(13$ Marks$)$

b$)$ Explain in what way NPV and IRR are complementary.

$(4$ Marks$)$

c$)$ A project has an initial cost of investment of K$25,000.$ It is expected to produce the

following cash inflows:

Year $1$ K$3,000$

Year $2$ K$4,500$

Year $3$ K$9,000$

Year $4$ K$11,500$

No scrap value is expected. The cost of capital is expected to be $9\%$ over the four

years. The company requires all capital investment projects to achieve payback within

four years or less.

Comment on whether the project should be accepted