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Question 1 You have recently been appointed as the Financial Manager's Assistant of...

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Accounting

Question 1
You have recently been appointed as the Financial Manager's Assistant of Prime Ltd,
and you were provided with the following information for project Lime.
The initial investment amounts to R288519, and the cost of capital (required rate of
return) of 15%. NOTE: YOU MAY USE THE INTEREST TABLES IN APPENDIX A
OF THE PRESCRIBED TEXTBOOK FROM PAGES 493-496
Required:
a) Calculate the net present value (NPV) and the profitability index (PI) of the
project Lime.
b) Evaluate the project using the NPV and PI and recommend whether to accept
or reject the project. Also, indicate the effect of the project on the shareholders.
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