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Here is currently making investment appraisals of two potential long-term supermarket projects, A and B. Both projects needs the similar initial investment of £20m. The following ratios have been calculated for the projects.

   Ratios                      Project A   Project B

   Payback period (years)                  5              6
   Accounting Rate of Return (ARR %)          15            18
   Net Present Value (NPV £m in 15 years)       120       145
   Internal Rate of Return (IRR %)          16             14

You are needed to give recommendations to the directors for a choice of either project A or project B. Here is not able to undertake the above two projects at the same time or a mixed project of A and B.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M9528854

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