An Australian mining company is planning to invest in a new lithium mine in South Africa using equity (ie, by issuing shares), An analysis by management has shortlisted two investment options: Option 1 has Net Present Value (NPV) of $100,000 and payback period of 5 years; Option 2 has NPV of $200,000 and the payback period of 10 years. The management of the company is risk- adverse and prefers an investment project with lower risk.

Required A. The company has analysed investment options using two capital budgeting techniques, NPV and payback period. Explain which method is preferred and why. (4 marks)

B. Identify and explain 2 other factors the company should consider (besides the two methods dscussed above) in making their investment decision. (4 marks)

C Explain how inancing theirinvestment by raising funds from issuing shares (equity/ would atect the income statemnent and balance sheet. (7 marks)

Pease label your responses as Part A, B or Cand start each part on a new line.