Question: (i) ABC Ltd. plans to undertake a project which has an initial cost of $7,000 but will generate cash flows of $3,000 and $3,500 over

(i) ABC Ltd. plans to undertake a project which has an

(i) ABC Ltd. plans to undertake a project which has an initial cost of $7,000 but will generate cash flows of $3,000 and $3,500 over the next two years. Calculate the Net Present Value of this investment if the opportunity cost of capital is 10% ? (ii) What is the Payback Period of this project? [1] (iii) Should ABC Ltd. undertake this project? Give a reason(s) for your answer? [2]

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