Quelpr
21 marksInvestment Appraisal

CAPE Management of Business Unit 1 · 2008 · Paper 2 · Question 5(a)

A publishing company has three mutually exclusive investment opportunities (Projects A, B, and C), each requiring an initial outlay of $200,000 with a 10% discount rate.

Calculate the payback period and the net present value for EACH project.

This question uses a figure or table from the paper — you'll see it when you practise.

The mark scheme is shown once you've answered.

Practise this question

Other parts of this question

  1. 5(b)Indicate which project the company should invest in, based on the payback method.[1 mark]
  2. 5(c)Indicate which project the company should NOT consider investing in, using the net present value (NPV).[1 mark]
  3. 5(d)Outline ONE advantage that the NPV method has over the payback method.[2 marks]

More practice: the rest of this paper · more Investment Appraisal questions · all CAPE Management of Business Unit 1 past papers