Question: QUESTION 4 [ 2 0 MARKS ] a . A company in Ramotswa has BWP 3 0 0 0 0 to invest in either Project
QUESTION MARKS a A company in Ramotswa has BWP to invest in either Project A or Project B Each project runs over three years. The expected cash inflows at the end of each year are displayed in the table. Project A Project B Year : P Year : P Year : P Year : P Year : P Year : P The required rate of return discount rate is per annum. Because both projects pay out P over the three years, they appear to be equally profitable. Do an analysis to prove or disprove this. i ii The NPV of Project A The NPV of Project B b What conclusion can you draw? Are the projects equally profitable? marks marks marks c You pay a fixed amount of P per month at the end of each month for the next five years. The compound interest rate is per month. How much money will you have saved at the end of the five years? marks
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