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Beta Ltd is deciding whether to invest in a five-year project which requires an immediate investment of 550,000, and has the following cash inflows at

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Beta Ltd is deciding whether to invest in a five-year project which requires an immediate investment of 550,000, and has the following cash inflows at the end of each year: Year 1: 100,000 Year 2: 120,000 Year 3: 150,000 Year 4: 200,000 Year 5:140,000 Required: a) Calculate the Net Present Value (NPV) of the project if the required annual return on new investments is 10%. (7 marks) b) Advise Beta, giving a brief reason, whether they should undertake the project based on the NPV you have calculated in a). Your answer should include a brief explanation of the meaning of NPV. (4 marks) c) Calculate the net present value (NPV) of the project using a discount rate of 8%. (4 marks) d) Calculate the internal rate of return (IRR) for the project. Give your answer as a percentage, to one decimal place. (4 marks) e) Explain one advantage and one disadvantage of the IRR method of investment appraisal. Required: a) Calculate the Net Present Value (NPV) of the project if the required annual return on new investments is 10%. (7 marks) b) Advise Beta, giving a brief reason, whether they should undertake the project based on the NPV you have calculated in a). Your answer should include a brief explanation of the meaning of NPV. (4 marks) c) Calculate the net present value (NPV) of the project using a discount rate of 8%. (4 marks) d) Calculate the internal rate of return (IRR) for the project. Give your answer as a percentage, to one decimal place. (4 marks) e) Explain one advantage and one disadvantage of the IRR method of investment appraisal. (4 marks) f) Instead of NPV or IRR, explain to Beta how they could use the payback method of investment appraisal to decide whether to undertake the project. Your answer should include a calculation of the payback period for the project. (7 marks)

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