Subject: Management Accounting URGENT NEED

Q2. M/s Sons & Sons is considering two projects, A & B, with cash flows as shown below: period Cash Flow of Project A Project B 0 -90,000 -150,000 1 30,000 72,000 2 30,000 35,000 3 50,000 40,000 4 30,000 25,000 a. Calculate discounted payback period, net present value and internal rate of return for each project using opportunity cost of capital 13 % & 9% for project A & B respectively. (1 Marks) b. Which project(s) should be accepted if: (1 Marks) (i) The projects are mutually exclusive and there is no capital constraint. (ii) The projects are independent and there is no capital constraint. (iii) The projects are independent and there is a total of $100,000 of financing for capital outlays in the coming period. c. Why the cost of capital for A might be higher than for B. State possible reason(s)