Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. sefalana (pty) ltd is evaluating two projects that

Sefalana (Pty) Ltd is evaluating two projects that have an expected life of five years...

80.2K

Verified Solution

Question

Accounting

Sefalana (Pty) Ltd is evaluating two projects that have an expected life of five years and an initial investment outlay of P1 million. Below are the estimated net cash inflows for each project:

Year

Cash flows - Project A (Pula)

Cash flows -Project B (Pula)

1

300,000

400,000

2

320,000

400,000

3

370,000

400,000

4

430,000

400,000

5

550,000

400,000

The cost of capital for both projects is 10 per cent.

Required:

Advise management on the project that they can invest in based on the following:

Net Present Value (NPV).

Sefalana (Pty) Ltd is evaluating two projects that have an expected life of five years and an initial investment outlay of P1 million. Below are the estimated net cash inflows for each project:

Year

Cash flows - Project A (Pula)

Cash flows -Project B (Pula)

1

300,000

400,000

2

320,000

400,000

3

370,000

400,000

4

430,000

400,000

5

550,000

400,000

The cost of capital for both projects is 10 per cent.

Required:

Advise management on the project that they can invest in based on the following:

a. Net Present Value (NPV).

b. Internal Rate of Return (IRR). (10 marks)

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

11. Give a 95% confidence interval, for μ1−μ2μ1-μ2 given the following information. n1=25n1=25, ¯x1=2.65x¯1=2.65, s1=0.91s1=0.91 n2=45n2=45, ¯x2=2.45x¯2=2.45, s2=0.83 ---------- ±...

Advance Math
Q

Theory of inheritance of acquired characters was given by (a) Wallace (b) Lamarck (c) Darwin (d) De Vries.

Biology
Q

Consider product A and product B who have independent demands from one another. Now assume that...

General Management
Q

Clean coal is a technology that captures and sequesters the pollutants released by burning it...

Biology
Q

David invests $800 into an account with a 2.3% interest rate that is compounded semiannually.How...

Basic Math
Q

7 Write the standard form equation of the hyperbola Vertices 10 3 10 11 Foci...

Calculus
Q

Consider the following graph of a derivative f a At what a values do the...

Calculus
Q

Sadie gave you check number 6877 for $75 from Sundown Dog Rescue. Sadie had agreed...

Accounting
Q

A sample of 5 months of sales data provided the following information: ...

Accounting
Q

of Net Income that is not allocated to dividends is retained as Equity. wing transactions...

Accounting
Q

Required information [The following information applies to the questions displayed below.] Reba Dixon...

Accounting
Q

Pelzer Printing Inc. has bonds outstanding with 9 years left to maturity. The bonds have...

Finance