Branton & Co Ltd is choosing between two mutually exclusive investment opportunities, Project A and Project B. The estimated cash flows for the two projects are as follows:

The business’s cost of finance is estimated at 10 per cent.
Calculate:

(a) the net present value for both projects

(b) the approximate internal rate of return for Project A

(c) the payback period for both projects.

Investment (immediate cash outflow) Net annual cash inflows: Year 1 Year 2 Year 3 Cash inflow from residual value year 3 Project A 000 50 39 9 12 7 Project B 000 36 28 8 14 6