Accounting 9706 · AS & A Level · Investment appraisal

Investment appraisal — practice question

Waheed is deciding on a project and needs to judge its financial worth by using net cash flows and net present value.
(a)[10]

Fill in the table below by working out the net cash flow for each project year.

(b)[4]

Calculate the net present value (NPV) for the project, on the assumption that day tickets are sold.

(c)[7]

Advise Waheed whether he should sell day tickets or annual tickets if he goes ahead with the project. Support your answer. Recalculating the NPV with annual tickets is not needed.

(d)[4]

State two advantages of ARR and two disadvantages of it.

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