Discuss the advantages and disadvantages of the Payback Period method in capital budgeting. Discussion must include at least two $(2)$ of each. Bullet responses are permitted and encouraged $(4$ marks$)$

What is the IRR rule in capital budgeting?

$(1$ mark$)$

What is the problem with IRR and mutually exclusive projects, and how can it be overcome?

$(4$ marks$)$

Having successfully completed your Masters in Corporate Pinance at the Mona School of Business, you were head hunted and engaged by a bluc$-$chip company listed on the JSE in the capacity of Financial Specialist. Your very first task was to review capital budget proposals for the upcoming financial year. Two $(2)$ projects were short listed: Project Alpha and Project Beta.

PV $=$ They were mutually exclusive. The table below is a summary of their respective free cash flows.

$=12\%$

$=0\mathrm{.}12$

The company's and propect hurdte tate are $12"$ Select the pppropriate promect using the replication method $($show all workings$)$