Question Two A) iUse both the Net Present Value (NPV) and the Internal Rate of Return (IRR) to assess and draw conclusions when advising Mrs Mulenga who is wondering whether to spend K18m on an item of equipment to start her business, in order to obtain cash profits as shown below: Year Km 1 6 2 8 3 5 4 1 Note: Mrs Mulenga requires a return of 10% per annum. 8 marks

ii. Mrs Mulenga wants to form a business and has come to you, a managerial finance manager for advice on a sole proprietor; what is your advice to Mrs Mulenga?

iii. Unfortunately Mrs Mulenga has no idea on the importance of working capital for a sole trader. Discuss the likely conversation you would have with her.