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mangement accounting Question 2 A Differentiate between capital and revenue expenditure. (6 m B. Distinguish between long-term and short-term decision-making. (6 m. c. Builders Construction
mangement accounting
Question 2 A Differentiate between capital and revenue expenditure. (6 m B. Distinguish between long-term and short-term decision-making. (6 m. c. Builders Construction Company is considering two major investments. Respective flows are as follows: Project 1 S 1 000 000 Project 2 $ 1 000 000 Cost Cash inflows: Year 2 3 4 5 100 000 200 000 600 000 700 000 800 000 500 000 500 000 100 000 50 000 50 000 The weighted average cost of capital for the projects is 14%. i. You are required to calculate the: 1. Payback period for both projects 2. Net Present Value for both projects 3. Internal rate of return for Project 1 (2 marks) (6 marks) (6 marks) ii. Advise Builders Construction which project to choose and why, based on 1 and 2 above. (4 marks) (Total 30 marks)Step by Step Solution
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