Chamberlain PLC is considering two investment projects:

Project:	A	B
Project Life	6 years	5 years
000	000
Initial investment in plant and equipment	220,000	150,000
Net cash flows:
Year 1	25,000
Year 2	28,500
Year 3	33,000
Year 4	44,500
Year 5	67,500
Year 6	155,500
Net Present Value (10%)	-	15,512
Internal Rate of Return (approximation)	-	17.9%

(a)	Determine the net present value of project A using Chamberlains required rate of return on projects of 10% (show all workings).

(b) Determine the internal rate of return on project A (show all workings).

(c)	On the basis of your answers to (a) and (b), advise the company on which investment should be undertaken (assume the hurdle rate = required rate of return for Chamberlain).

(d)	Critically assess the usefulness of the internal rate of return criterion for investment appraisal.

(e) Explain the payback method of investment appraisal and discuss its limitations.