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Answer the question within 40 min please I) Using examples, explain the importance and limitations of the payback period. [10 Marks) II) Year 1 2
Answer the question within 40 min please
I) Using examples, explain the importance and limitations of the payback period. [10 Marks) II) Year 1 2 3 4 P&S Ltd. has 50,000 to spend on capital investment projects. The company is currently evaluating two (2) projects for their future investment. Required rate of return is at 12%. Project A Project B Inflows () Outflows () Inflows () Outflows () 35,000 30,000 25,000 15,000 45,000 25,000 30,000 15,000 50,000 25,000 40,000 15,000 55,000 30,000 45,000 10,000 Use the above information to calculate and advise the management on : a) IRR (Hint: Project A - between 15% and 20% Project B - between 20% and 25%) [20 Marks)Step by Step Solution
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