Question: Question 3 [20 marks] You are a Trainee Financial Manager at BSG Capital (Pty) Ltd. BSG Capital needs to choose between two equal-risk mutually exclusive

Question 3 [20 marks] You are a Trainee Financial Manager at

Question 3 [20 marks] You are a Trainee Financial Manager at BSG Capital (Pty) Ltd. BSG Capital needs to choose between two equal-risk mutually exclusive investment opportunities, namely Project A and Project B. The cost of capital is 13%. The relevant cash flows for each project are as follow: Project A 312 000 Project B 386 880 Initial Investment 37 440 49 920 Cash flow Year 1 68 640 74 880 Cash flow Year 2 105 300 117 000 Cash flow Year 3 140 400 163 800 Cash flow Year 4 187 200 234 000 Cash flow Year 5 Required: a) Calculate the net present value of Project A and Project B. Use the below table format separately for Project A and Project B. (Round the discounting factor to 3 decimals). (17 Marks) b) Make a recommendation to BSG Capital on which project must be accepted and (3 Marks) why

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