Question
A company is considering two mutually exclusive expansion projects. Plan A requires a k40 million expenditure on a large scale integrated plant that would provide
A company is considering two mutually exclusive expansion projects. Plan A requires a k40 million expenditure on a large scale integrated plant that would provide expected case flows of k6.4 million per year for 20 years .Plan B requires a k12 million expenditure to build a somewhat less efficient ,more labour intensive plant with expected cash flows of k2.72 million per year for 20 years . The firm's WACC is 10 %. Determine the financial viability of each project using the net present value (NPV) method of evaluation and make a recommendation on the project that the company should implement !
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