Reference no: EM133179747
Question - Mr Chambers has been authorised to spend up to £200,000 for project 1, £300,000 for project 2 and £350,000 for Project 3.
The cash flow for project 1 in the next three years is £80,000, £90,000 and £110,000 respectively. Project 1 has a discount rate of 12 percent.
The cash flows for project 2 in the next three years are £90,000, £120,000 and £125,000 respectively. Project 2 has a discount rate of 15 percent.
The cash flows for project 3 in the next three years are £95,000, £115,000 and £180,000 respectively. Project 3 has a discount rate of 18 percent.
Required - Evaluate the three projects using the following investment appraisal methods:
1. Payback Period (PP)
2. Net Present Value (NPV)
3. Discounted Payback Period
4. Internal Rate of Return (IRR)
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