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Question 2 a) Discuss the relationship between Risk and Return. 1 mark b) List the two (2) main sources of capital that big corporations use

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Question 2 a) Discuss the relationship between Risk and Return. 1 mark b) List the two (2) main sources of capital that big corporations use to finance their investments. 2 marks c) Discuss which source of capital is used MORE and WHY? 2 marks Question 3 4 marks Net Present Value (NPV). RAK Itd made an investment in Project A and expects the following estimated Net Cash inflows below for five (5) years. Use this information to answer the questions that follow: Project A Time 0 (10,000) 1 2,500 2 5,000 3 4,500 4 8,000 5 3,500 2 marks a) Calculate Net Present Value (NPV) of Project A, assuming the cost of capital is 10% per annum. b) Should RAK Ltd accept this Project? If YES, Why? If NO, why not? Assume an annual interest rate of 10% for all five (5) years. 2 marks

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