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  3. a) calculate the dynamic payback period for the pr

a) Calculate the dynamic payback period for the project A b) Calculate the return on...

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Finance

a) Calculate the dynamic payback period for the project A

b) Calculate the return on investment of the project A

c) Determine the appropriate selling price which will ensure the NPV of project A and B are the same

d) Determine if the NPV of the project A is more sensitive to interest rate than the selling price. Use appropriate diagrams and appropriate parameter

Parameter Project A Project B
Project lifetime years 20 20
Real interest rate 10% 10%
Investment expenditure 25 000 50 000
Linear depreciation of plant 5% per annum 1% per annum
Total operating costs 5 000 2 500
Energy units supplied 20 000 per annum 20 000 per annum
Tariff (unit selling price) .50 ?

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