QuestionQuestion

Scenario: Hollywood Conservatories Ltd is considering three investment projects, only one can be selected. You have been asked to identify which project the company should choose for investment.
The following information is provided:
Discount rate: 10% January 2015 Semester 7
Description Project A Project B Project C Investment (Cash Outflow) £60,000 £65,000 £45,000
Year 1- Cash Inflow £20,000 £24,750 £20,000
Year 2- Cash Inflow £18,500 £24,750 £15,000
Year 3- Cash Inflow £26,000 £24,750 £12,500
Year 4- Cash Inflow £32,500 £24,750 £25,000
Requirement: (
AC3.3) You are required to assess the viability of a project using investment appraisal techniques. Briefly explain which project would you recommend and why? (a) Net present value (NPV) (b) Payback Period (years

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