Question 3 RP plc is looking at a possible 5-year project with the following expected cash flows: 000 3,000 Initial investment Net cashflows in year: 1 2 3 4 5 800 300 1,200 1,200 1,200 Scrap value at the end of 5 years of assets specific to this project is 1,000,000 RP plc bases its investment decisions on a number of criteria. This includes a target payback of 2 years. Their cost of capital is under review but it is currently 10% Year 3 4 Present value factors at 10% 1 2 5 Present value factor 0.9090.826 0.751 0.683 0.621 Required: (a) Calculate the following for the above project: (i). Payback period [4 marks] (ii) Net present value at 10% [6 marks] (b) Comment on the viability of the project using your findings in (a). [7 marks] (c) Explain a possible cause of an increase in the cost of capital. (4 marks] (d) State the advantages of using net present value in investment decisions. [4 marks] le) State five other factors that may require consideration before a final decision is made. (5 marks]