Please answer the question 1-14 sheet four. And give the working in detail. Thanks. 
12. What are the main stages of the investment decision making process? SheetFour Prior to the class au students should prepare answers to the following questions: 1. Do investment appraisal techniques provide decision makers with decision advice that they definitely should follow? Why or why not? 2. Concerning the payback: a. Describe how the payback period is calculated and describe the information this measure provides about a sequence of cash flows. What is the payback criterion decision rule? b. What are the problems associated with using the payback period as a means of evaluating cash flows? c. What are the advantages of using the payback period to evaluate cash flows? Are there any circumstances under which using payback might be appropriate? 3. Concerning NPV and IRR: a. Describe how NPV is calculated and describe the information this measure provides about a sequence of cash flows. What is the NPV criterion decision rule? b. Why is NPV considered to be a superior method of evaluating the cash flows from a project? Suppose the NPV for a project's cash flows is computed to be 2,500. What does this number represent with respect to the firm's shareholders? 0. Describe how IRR is calculated and describe the information this measure provides about a sequence of cash flows. What is the IRR criterion decision rule? 4. A project that provides annual cash flows of 400 for eight years costs 1500 today. Use the NPV and IRR methods to determine whether this is a good project if the required return in 6%. What if the required return is 22%? At what discount rate would you be indifferent between accepting the project and rejecting it?12. What are the main stages of the investment decision making process? SheetFour Prior to the class au students should prepare answers to the following questions: 1. Do investment appraisal techniques provide decision makers with decision advice that they definitely should follow? Why or why not? 2. Concerning the payback: a. Describe how the payback period is calculated and describe the information this measure provides about a sequence of cash flows. What is the payback criterion decision rule? b. What are the problems associated with using the payback period as a means of evaluating cash flows? c. What are the advantages of using the payback period to evaluate cash flows? Are there any circumstances under which using payback might be appropriate? 3. Concerning NPV and IRR: a. Describe how NPV is calculated and describe the information this measure provides about a sequence of cash flows. What is the NPV criterion decision rule? b. Why is NPV considered to be a superior method of evaluating the cash flows from a project? Suppose the NPV for a project's cash flows is computed to be 2,500. What does this number represent with respect to the firm's shareholders? 0. Describe how IRR is calculated and describe the information this measure provides about a sequence of cash flows. What is the IRR criterion decision rule? 4. A project that provides annual cash flows of 400 for eight years costs 1500 today. Use the NPV and IRR methods to determine whether this is a good project if the required return in 6%. What if the required return is 22%? At what discount rate would you be indifferent between accepting the project and rejecting it?5. What is the IRR of the following set of cash flows? Year Cash flow () e. For the cash flows in the previous question, what is the NPV at a discount rate of zero percent? What if the discount rate is 10%? If it is 20%? If it is 30%? 7. To what extent should accounting conventions be included in the investment appraisal process? 8. Why should inflation be taken into account when appraising investment opportunities? 9. In the presence of inflation, there are two interest rates: the nominal rate and the real rate. Which should be used in the investment appraisal process? 10. Distinguish between risk and uncertainty. 11. Consider Article 22 and the associated discussion in Boakes (p.118). What is the difference between business risk and financial risk and can you identify the risks that appear to apply to Woolworths as presented in the article? 12. Outline the main problems associated with the use of the ENPV approach. 13. Explain the principle underlying the risk adjusted discount rate approach. Why might the use of a higher discount rate to reflect increased risk be unwise in some circumstances? 14. Why is sensitivity analysis of assistance to decision makers appraising investment opportunities? Sheet Five This class will be held in a computer room. Your seminar tutor will provide guidance and opportunities for discussion in the class, but you must at least attempt the tasks below prior to attending. 1. Prior to the class, download the Excel spreadsheet ClassS.xlsx from DUO. On the worksheet Q1 in CIassS.xst you will cash flows for two projects. Prior
