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Question 1 (16 Marks) You have recently been appointed as the Financial Manager's Assistant of Prime Ltd and you were provided with the following

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Question 1 (16 Marks) You have recently been appointed as the Financial Manager's Assistant of Prime Ltd and you were provided with the following information for project Lime. Year Net cash flows 1 165 329 2 186 732 3 178 668 4 5 191 268 197 568 The initial investment amount to R548 186 and cost of capital (required rate of return) of 16%. Required; a) Calculate the net present value (NPV) and the profitability index (PI) of the project Lime. (12 marks) b) Evaluate the project using the NPV and Pl, and recommend whether to accept or reject the project. Also indicate the effect of the project to the shareholders. (4 marks)

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