(a)[4]
Calculate the net cash flow for each of Years 1 to 4 for Option 1.
(b(i))[4]
Calculate the net present value (NPV) for Option 1.
(b(ii))[4]
Calculate the net present value (NPV) for Option 2.
(c)[1]
State what is meant by the payback period.
(d)[4]
Discuss whether Babar ought to consider the payback periods of the options when making the decision. Calculations are not required.
(e)[7]
Advise Babar which option he ought to implement. Justify your answer.
(f)[1]
Name one additional investment appraisal method that Babar could use.