(a) Vineet plc. is considering two investment projects (mutually exclusive) whose cash flows are shown below:...

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(a) Vineet plc. is considering two investment projects (mutually exclusive) whose cash flows are shown below: Points in time (yearly intervals) 0 3 Project A (£) -240,000 120,000 90,000 84,000 36,000 Project B (£) -240,000 30,000 90,000 110,000 120,000 Given the cost of capital of Vineet plc. is 15% and no threshold figure is set, use the discounted payback method to advise the company which project should be taken and briefly discuss the popularity of payback methods. [10 marks] (a) Vineet plc. is considering two investment projects (mutually exclusive) whose cash flows are shown below: Points in time (yearly intervals) 0 3 Project A (£) -240,000 120,000 90,000 84,000 36,000 Project B (£) -240,000 30,000 90,000 110,000 120,000 Given the cost of capital of Vineet plc. is 15% and no threshold figure is set, use the discounted payback method to advise the company which project should be taken and briefly discuss the popularity of payback methods. [10 marks]

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Using the discounted payback method we can calculate the number of years it will take for each proje... View the full answer