Question: QUESTION TWO [12] Your firm uses the NPV method and asks you to evaluate the following mutually exclusive projects: Year Cashflow (R) 0 1 2

QUESTION TWO [12] Your firm uses the NPV method and asks you to evaluate the following mutually exclusive projects: Year Cashflow (R) 0 1 2 3 4 Proposal L -R67,232 R38,000 R35,000 R65,000 R20,000 Proposal M -R76,300 R14,800 R69,450 R39,700 R79,600 Using the NPV method, evaluate these proposals using a discount rate of 12%. Compare the two proposals and arrive at the decision on which of the two is better than the other.

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