Question: QUESTION 4 [ 2 0 MARKS ] a . A company in Ramotswa has BWP 3 0 0 0 0 to invest in either Project

QUESTION 4[20 MARKS] a. A company in Ramotswa has BWP30000 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 1: P10000 Year 1: P14000 Year 2: P12000 Year 2: P12000 Year 3: P14000 Year 3: P10000 The required rate of return (discount rate) is 8% per annum. Because both projects pay out P36000 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? (6 marks)(6 marks)(3 marks) c. You pay a fixed amount of P1000 per month at the end of each month for the next five years. The compound interest rate is 1% per month. How much money will you have saved at the end of the five years? (5 marks)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!