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Question 4 A company is thinking in investing in one of two potential new products for sale. The projections are as follows: Year Revenue/cost f
Question 4 A company is thinking in investing in one of two potential new products for sale. The projections are as follows: Year Revenue/cost f (Product A) Revenue/cost f. (Product B) (45,000) outlay (45,000) outlay 7,200 3,600 A ON- O 7,200 7,600 13,200 15,600 25,200 19,000 a) Calculate the payback period for both products b) Calculate NPV of both products assuming a discount rate of 7% c) Which product should be chosen and why? d) Calculate the IRR for Product A only using 3% and 19% to 1d.p. e) Outline the advantages and disadvantages of the NPV, payback and IRR
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