Pana Part A: Sunrise plc is currently making investment appraisals of two potential long-term projects, X and Y. Both projects require the same initial investment of 2m. The following ratios have been calculated for the projects. Ratios Project x Project Y Payback period (years) Accounting Rate of Return (ARR %) Net Present Value (NPV m) Internal Rate of Return (IRR %) 4 15 120 16 5 20 145 13 You are, by critically evaluating these techniques, required to provide recommendations to the directors of Sunrise for a choice of either project X or project Y. Sunrise is not able to undertake the above two projects at the same time or a mixed project of X and Y. Sunrise has maintained its dividend growth rate of 5% for more than 10 years although it has suffered a continuously declined net profit in the last three years. (35 marks) Part B: By using any relevant information provided in Part A, explain and critically evaluate: 1. Main sources of finance which are available for Sunrise to finance the chosen project in Part A, and (25 marks) (25 marks) 2. The dividend policy which is implemented by Sunrise. 152 Focus