Question 4 The following information relates to two possible capital expenditure projects. Because of capital rationing only one project can be accepted: Project A Project B 400,000 450,000 Initial cost Expected life Resale value of project Expected Profit/Loss: 5 years 5 years 50,000 60,000 Year 1 33,000 60,000 Year 2 40,000 75,000 Year 3 25,000 55,000 Year 4 32,000 50,000 Year 5 36,000 40,000 The company estimates its cost of capital is 8%. Required: a) Appraise the two projects using the net present value method (Present Value tables are provided at the end of this paper). b) Based upon your calculations, which project should be accepted - give reasons. (5 Marks) (1 Mark) c) Explain the factors management would need to consider, in addition to the financial factors, before making a final decision on a project. (4 Marks) (Total: 10 Marks)