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Question 1 Q1. A sum of GHS 400,000 invested today in an IT project may give a series of below cash inflows in future: GHS
Question 1 Q1. A sum of GHS 400,000 invested today in an IT project may give a series of below cash inflows in future: GHS 70,000 in year 1 GHS 120,000 in year 2 GHS 140,000 in year 3 GHS 140,000 in year 4 GHS 40,000 in year 5 Required; a. If Opportunity cost of capital is 8% per annum, then should we accept or reject the project? (Net present value) b. If Opportunity cost of capital is 15% per annum, then should we accept or reject the project? (Net present value) Question 2 Q2. You must analyze two projects, ZO and ZA. Each project costs $10,000, and the firm's rate of return is 12%. The expected cash flows are as follows: 0 1 2. 3 4 Project X -$10,000 Project Y -$10,000 $6,500 $3,500 $3,000 $3,500 $3,000 $3,500 $1,000 $3,500 i. Calculate each project's internal rate of returns (IRR) using interpolation method and discounted payback. ii. Which project(s) should be accepted if they are independent? iii. Which project(s) should be accepted if they are mutually exclusive
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