Question
Mussa Blankets (Pty) Ltd is in the process of choosing the better of two equal-risk, mutually exclusive capital expenditure projects in the greater Johannesburg area
Mussa Blankets (Pty) Ltd is in the process of choosing the better of two equal-risk, mutually exclusive capital expenditure projects in the greater Johannesburg area Project Winter and Project Summer. The relevant cash flows for each project are shown in the following table. The companys cost of capital is 14%
| Cashflows | Project Winter | Project Summer |
| Outlay | (R57 000) | (R54 000) |
| Year 1 | 20 000 | 22 000 |
| Year 2 | 20 000 | 20 000 |
| Year 3 | 20 000 | 18 000 |
| Year 4 | 20 000 | 16 000 |
Calculate each projects payback period and select the best investment option. (10)
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The Ascendancy Of Finance
Authors: Joseph Vogl, Simon Garnett
1st Edition
1509509305, 978-1509509300
