Scenario: An academic organisation is considering the purchase and operation of its own fleet of buses to transport its students to and from school at the end of this year. The bursar at the school has confirmed that, if this project can be implemented, the school will be able to cancel its current contract with the local bus operator, and as a result, the school will make cash savings of N$45 600 each year from 2011 onwards, after deducting operating costs. The buses will cost the school N$255 000 and will have a scrap value of N$75 000 when they are sold after five years. The schools cost of capital is 10%, and the maximum required payback is 3.5 years.

Questions: 1. Calculate the projects payback period. 2. Calculate the projects Net Present Value (NPV). 3. Calculate the projects internal rate of return (IRR). 4. Determine with reasons which project (s) will finally be recommended.