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QUESTION TWO [25] Sweetpea Ltd has a choice of two projects to invest in. The following details relate to these projects: Project Raisins R 85000
QUESTION TWO [25] Sweetpea Ltd has a choice of two projects to invest in. The following details relate to these projects: Project Raisins R 85000 Investment required 6 years Project Chocolate chips R 80000 6 years 12% Required: 2.1 Use the Net Present Value (NPV) method to determine which project Sweetpea Ltd should choose. 2.2 Outline the merits of using the NPV method. (4) 2.3 Calculate the Payback Period for both projects and discuss an advantage of using this method. (5) 2.4 State a disadvantage of using the Accounting Rate of Return Method. (2)
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