Accounting 9706 · AS & A Level · Investment appraisal

Investment appraisal — practice question

Use Source A in the insert.
(a)[10]

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

(b)[4]

Calculate the net present value (NPV) of the project, assuming 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. Give reasons for your answer. A recalculation of the NPV with annual tickets is not needed.

(d)[4]

State two advantages and two disadvantages of using ARR.

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