4. ABC Ltd. is considering undertaking a project which has an initial cost of $3000 but will generate annual revenues of $2000 and $4000 over the next two years. If the project also has a clean-up cost of $2000 that must be paid at the end of the 2nd year:

(a) Calculate the Net Present Value of the project if the opportunity cost of capital is 15%. [3]

(b) What is the Payback Period of the project? [1]

(c) Give one reason for a company to use the Payback Period method over Net Present Value when deciding amongst projects? [1]

(d) Should ABC Ltd. undertake this project? Give a reason(s) for your answer? [2]