- 20 Marks
SCS – Apr 2022 – L3 – Q6 – Investment decisions
Compute NPV for two investment options and evaluate potential benefits and difficulties for HPC.
Question
a) For the two strategic development options being considered by HPC, compute:
i) the Net Present Value of Option 1.
ii) the Net Present Value of Option 2.
iii) the Net Present Value for the worst-case outcome for Option 1. (10 marks)
b) Discuss THREE (3) potential benefits and TWO (2) difficulties for HPC of undertaking each of the strategic development options. Your answer should include an evaluation of the calculations of the profitability index of each option. (10 marks)
Find Related Questions by Tags, levels, etc.
- Tags: Investment Analysis, NPV, Profitability Index, Strategic Development
- Level: Level 3
- Topic: Investment Decisions
- Series: APR 2022
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