Question Q3 Read the scenario below and answer the questions that follow: A company is considering investing in a project, Project X, which has the following details: Initial investment: R1 million. Scrap value at the end of the project: 25% of initial investment. Target payback period: four years. Cash flows from project:

Year	1	2	3	4	5
Annual cash flows (R'000)	100	150	350	500	300

The cost of capital on Project X is 10%. You are given the following discount factors at 10%:

Year	Discount factor @ 10%
1	0.909
2	0.826
3	0.751
4	0.683
5	0.621

Note: round of all answers to the nearest thousand.

3.1 Using the table provided below, calculate the net present value (NPV) of the project and indicate whether the project should be accepted or rejected:

Year	Discount factor @ 12%	Net cash flow (R'000)	Present value

3.2 Using the table provided below, calculate the payback period of the project:

Year	Cash flow	Cumulative cash flow

3.3 Assuming an IRR of 12%, what would your investment decision be, based solely on IRR? Substantiate your answer. 3.4 Based on the NPV and payback period, should Project X be accepted? Substantiate your answer.