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19) There are two competing proposals for the redevelopment of a piece of vacant land in...

19) There are two competing proposals for the redevelopment of a piece of vacant land in Accra. One is to construct an office block on the site and the other is to construct a casino.

Year

Office

Casino

0

-300

-300

1

-30

-400

2

90

50

3

180

100

4

215

800

(a) Calculate the Net Present Value of each project using a discount rate of 6% and comment on your results

(b) Calculate the payback of period of each project and comment on your results

(c) Based on the internal rate of return criteria, explain the advice you would give to your client if the internal rate of returns for Office and Casino are 16% and 17.8% respectively

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Expert Solution

jeff jeffy answered 4 months ago
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