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You have been asked, as a financial manager in Cortex Limited, to consider whether to invest in projects A or B
You have been asked, as a financial manager in Cortex Limited, to consider whether to invest in projects A or B. The expected cash flows for projects A& B over the next 4 years are given. Each project has an initial investment of Rs 150 million (Mn) and the Weighted Average Cost of Capital is 13%.
| Years | Expected Net Cash Flows | Expected Net Cash Flows |
| Project A | Project B | |
| 1 | 68 | 74 |
| 2 | 65 | 76 |
| 3 | 63 | 73 |
| 4 | 60 | 71 |
Required:
Calculate and interpret your results for each project, using these investment appraisal methods below:
(i) Payback
(ii) NPV
(iii) IRR
(iv) ARR
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