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You are the Financial Manager of BlueSky plc. The company is considering two mutually exclusive investment opportunities and has projected the following cash flows. Both
You are the Financial Manager of BlueSky plc. The company is considering two mutually exclusive investment opportunities and has projected the following cash flows. Both projects require an annual return of 9% due to the risks involved. Year Project A () Project B () 0 -100,000 - 100,000 1 60,000 50,000 2 40,000 40,000 3 20,000 30,000 4 10,000 10,000 a) Calculate the Net Present Value (NPV) for each project. Based on the NPV investment appraisal method which project should the company choose? Discuss the advantages and disadvantages of the NPV method. (6 marks) b) Find the discounted payback period for projects A & B. Based on the discounted payback period investment appraisal method which project should the company choose. (4 marks) c) List the goals of the financial manager. Is there a main goal? Discuss
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