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3 marksInvestment Appraisal

CAPE Management of Business Unit 1 · 2010 · Paper 2 · Question 5(d)

Assume the IRR (Internal Rate of Return) of the projects are: Project A: 11.5%, Project B: 8%, Project C: 15%. Based on the IRR, indicate, giving a reason, which project the company should accept.

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Other parts of this question

  1. 5(a)Compute the cumulative cash flow for EACH project.[13 marks]
  2. 5(b)Compute the payback period, in years, to two decimal places, for EACH project.[6 marks]
  3. 5(c)Indicate, giving a reason, which project the company should accept based on payback period.[3 marks]

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