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Find and calculate the payback period for each project

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Reference no: EM132552534

As a financial manager of Limited Enterprises, you are required to analyse two proposed capital investments, Projects 1 and 2. Each has a cost of R100 000, and the cost of capital for each project is 12%. Depreciation on each project is estimated at R25 000 per year. The projects' expected profit are as follows:

Year Project 1 Project 2

1 R40 000 R10 000

2 R5 000 R10 000

3 R5 000 R10 000

4 (R15 000) R10 000

Required

Question 1: Calculate the payback period for each project (In years, months and days).

Question 2: Calculate the NPV for each project

Question 3: Which project or projects should be accepted if they are independent?

Question 4: Calculate the ARR for project 1.

Reference no: EM132552534

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