Question: there are 2 projects: YEAR PROJECT A $ PROJECT B $ 0 (500) (500) 1 70 100 2 80 0 3 90 400 4 100

there are 2 projects:

YEARPROJECT A $PROJECT B $
0(500)(500)
170100
2800
390400
41000
5110100
6120200
71300
8140100
91500
10150300

Required Tasks:

  1. You are required to calculate the PP, ARR, NPV, IRR, and Discounted PP of each project. (50%).
  2. Discuss the detailed advantages (strengths) and disadvantages (weaknesses) of each method of investment appraisal technique. (30%).
  3. You are required to comment on the stability of the projects. (10%).
  4. Show the ranking of the projects using all the above criteria, and as a professional accountant, critically advise your client on the best investment action, on whether to invest in project A or B. (10%)

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SOLUTION To solve the first part of the question we need to calculate the various investment appraisal techniques for both Project A and Project B Payback Period PP The payback period is the amount of ... View full answer

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