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QUESTION 1 A company is considering two alternative investment projects, both of which require the purchase of new equipment. The following information relates to the
QUESTION A company is considering two alternative investment projects, both of which require the purchase of new equipment. The following information relates to the two projects: Assume that net cash inflows occur at the end of the years to which they relate. The company's depreciation policy is to write off the cost of equipment using the straightline method. Cost of capital is per annum. REQUIRED a Calculate for each of Project A and Project B the i net present value. ii internal rate of return use and as discount rate b Recommend which project should be undertaken giving reasons for your decision.
QUESTION
A company is considering two alternative investment projects, both of which require the purchase of
new equipment. The following information relates to the two projects:
Assume that net cash inflows occur at the end of the years to which they relate.
The company's depreciation policy is to write off the cost of equipment using the straightline method.
Cost of capital is per annum.
REQUIRED
a Calculate for each of Project A and Project B the
i net present value.
ii internal rate of return use and as discount rate
b Recommend which project should be undertaken giving reasons for your decision.
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