QUESTION TWO

$(25$ Marks$)$

INFORMATION

The following information relates to two capital expenditure projects. Because of capital rationing, only one project can be

accepted.

The company estimates that its cost of capital is $12\%.$

REQUIRED

Use the information provided below to calculate the following:

$2\mathrm{.}1$ Payback Period of Project B $($answer expressed in years, months and days$).$

$2\mathrm{.}2$ Return on investment of Project A $($answer expressed to two decimal places$).$

$2\mathrm{.}3$ Net Present Value of both projects.

$2\mathrm{.}4$ Internal Rate of Return of Project B $($answer expressed to two decimal places$).$