a) A Business organization has to make a choice between two competing projects requiring an initial...

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a) A Business organization has to make a choice between two competing projects requiring an initial investment outlay of ach one expected to generate net-cash flow i.e. after tax and before depreciation as follows.. End of year project 1 project 2 1 10000 2 15000 12000 3 10000 18000 4 NIL 25000 5 12000 8000 6 6000 The cost of capital of the project is 10% p.a Required i. Using a table calculate the present value of project 1 and project 2.(10mamks) ii. Determine the net present value for project 1 and project 2.(3marks) iii. With reasons advise the management on the project to adopt.(3marks) b) Outline three merits of using net present value technique of evaluating an investment opportunity (6marks) c) Highlight four significance of cash flow statements (4marks) a) A Business organization has to make a choice between two competing projects requiring an initial investment outlay of ach one expected to generate net-cash flow i.e. after tax and before depreciation as follows.. End of year project 1 project 2 1 10000 2 15000 12000 3 10000 18000 4 NIL 25000 5 12000 8000 6 6000 The cost of capital of the project is 10% p.a Required i. Using a table calculate the present value of project 1 and project 2.(10mamks) ii. Determine the net present value for project 1 and project 2.(3marks) iii. With reasons advise the management on the project to adopt.(3marks) b) Outline three merits of using net present value technique of evaluating an investment opportunity (6marks) c) Highlight four significance of cash flow statements (4marks)

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Project Evaluation using Net Present Value NPV a Project Analysis i Present Value Calculations Year Project 1 Cash Flow Project 1 PV 10 Discount Rate ... View the full answer