Question 4. This question has five sub-questions: (a) to (e)

Sharma Engineering Limited is evaluating four capital investment projects Alpha, Beta, Gamma and Delta, which have cash flows as shown below:

Projects

Alpha

-1000

-1000

Beta

Gamma

-1000

Cashflows

Year 1

1000

910

440

Year 2

Year 3

910

610

1440

Delta

Year O

-1000

1440

440

270

2

3

4

5

uiz Information

Question 4(a)

Rank these four projects according to the payback period. (3 marks)

Question 4(b)

What is the internal rate of return for Project Alpha? (1 mark)