QUESTION $3$

$[16$ MARKS$]$

The following information relates to three possible capital expenditure projects that Agrismart Solutions is considering undertaking. The company estimates its cost of capital is $18\%.$

$\backslash$table$[[,$PROJECT$],[,$A$,$B$,$C$],[$Initial cost$,$N$$200000,$N$$230000,$N$$180000],[$Expected life,$5$ years,$5$ years,$4$ years$],[$Scrap value expected,N$$10000,$N$$15000,$N$$8000],[$Expected cash inflows,N$$,$N$$,55000],[$Year $1,80\mathrm{.}000,100000,],[$Year $2,70000,70000,95000],[$Year $3,65000,50000,100000],[$Year $4,60000,50000,],[$Year $5,55000,50\mathrm{.}000,]]$

$\backslash$table$[[$REQUIRED:$,$MARKS$],[),$Calculate the payback period for Project A$,2],[$b$),$Calculate the accounting rate of return $($ARR$)$ for Project B$.,],[$c$),$Calculate the net present value $($NPV$)$ of Project C and advise whether the project is acceptable or not.,$4],[$d$),$Identify any five factors that Agrismart Solutions should consider in evaluating these investment proposals,$]]$