They have been presented with two start-up investment opportunities. Project Fly costing 800,000 and Project Bird...

  

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They have been presented with two start-up investment opportunities. Project Fly costing 800,000 and Project Bird costing 500,000. Both will have a lifespan of 5 years. The expected cash inflows for the projects are as follows:- Year Project Bird () Project Fly () 1 168,750 200,000 2 212,500 100,000 3 212,500 50,000 4 212,500 50,000 5 200,000 125,000 Required: (a) Calculate the Accounting Rate of Return, Payback Period and Net Present Value for Project Fly and Bird. Note: Use a Discount factor of 10%. (12 Marks) (b) Based on your calculation which project would you recommend Money Bags Ltd to accept. (2 marks) (c) Calculate the Internal Rate of Return for Project Fly (6 Marks) (d) Money Bags Ltd needs some advice on investment appraisal techniques. Critically evaluate Internal Rate of Return and Net Present Value techniques. (5 Marks) They have been presented with two start-up investment opportunities. Project Fly costing 800,000 and Project Bird costing 500,000. Both will have a lifespan of 5 years. The expected cash inflows for the projects are as follows:- Year Project Bird () Project Fly () 1 168,750 200,000 2 212,500 100,000 3 212,500 50,000 4 212,500 50,000 5 200,000 125,000 Required: (a) Calculate the Accounting Rate of Return, Payback Period and Net Present Value for Project Fly and Bird. Note: Use a Discount factor of 10%. (12 Marks) (b) Based on your calculation which project would you recommend Money Bags Ltd to accept. (2 marks) (c) Calculate the Internal Rate of Return for Project Fly (6 Marks) (d) Money Bags Ltd needs some advice on investment appraisal techniques. Critically evaluate Internal Rate of Return and Net Present Value techniques. (5 Marks)