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:
| YEAR | PROJECT A $ | PROJECT B $ |
| 0 | (500) | (500) |
| 1 | 70 | 100 |
| 2 | 80 | 0 |
| 3 | 90 | 400 |
| 4 | 100 | 0 |
| 5 | 110 | 100 |
| 6 | 120 | 200 |
| 7 | 130 | 0 |
| 8 | 140 | 100 |
| 9 | 150 | 0 |
| 10 | 150 | 300 |
Required Tasks:
- You are required to calculate the PP, ARR, NPV, IRR, and Discounted PP of each project. (50%).
- Discuss the detailed advantages (strengths) and disadvantages (weaknesses) of each method of investment appraisal technique. (30%).
- You are required to comment on the stability of the projects. (10%).
- 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%)
Step by Step Solution
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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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