Question: You are asked to evaluate two projects; A and B. The cash flows for each project are given below as follows: Year Project A Project

You are asked to evaluate two projects; A and B. The cash flows for each project are given below as follows:

Year Project A Project B
0 -R100 000 -R100 000
1 65 000 35 000
3 30 000 35 000
4 10 000 35 000

Required:

a) Determine the Net Present Value (NPV), Internal Rate of Return(IRR), Profitability Index(PI) and Pay Back(PB) of each of the two projects [8 marks]
b) Suppose that the two projects are independent; which one should be accepted? [1 mark]
c) Suppose the two projects are mutually exclusive; which one should be accepted? [1 mark]

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