A choice must be made between two projects, A and B. The following information is provided on each project:
|
Year |
Project A |
Project B |
|
|
(i) Initial investment (ii) Annual net cash inflows: |
1 2 3 4 5 |
R22 000 R10 000 R8 000 R6 000 R4 000 R3 000 |
R22 000 R3 000 R4 000 R6 000 R8 000 R10 000 |
|
R31 000 |
R31 000 |
||
|
(iii) The current cost of capital is 15% |
|||
Future-value Factors
|
Period (n) |
5% |
10% |
15% |
|
1 |
1.0500 |
1.1000 |
1.1500 |
|
2 |
1.1025 |
1.2100 |
1.3225 |
|
3 |
1.1576 |
1.3310 |
1.5209 |
|
4 |
1.2155 |
1.4641 |
1.7490 |
|
5 |
1.2763 |
1.6105 |
2.0114 |
Discounting Factors
|
Period (n) |
5% |
10% |
15% |
|
1 |
0.9524 |
0.9091 |
0.8696 |
|
2 |
0.9070 |
0.8264 |
0.7561 |
|
3 |
0.8638 |
0.7513 |
0.6575 |
|
4 |
0.8227 |
0.6830 |
0.5718 |
|
5 |
0.7835 |
0.6209 |
0.4972 |
The Total net cash flow for Project A is?
