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An organization wants to embark on a project out of which they expect some returns in a years time. The organization therefore wishes to finance
An organization wants to embark on a project out of which they expect some returns in a years time. The organization therefore wishes to finance the project through debt. They have approached a bank which has agreed to advance a loan to finance the project. The bank wishes to use the cash flows from the project as collateral. The organization has therefore prepared a project proposal specifying the proposed cash flows from the project for a period of five years. The initial requirement for the project is GHC
YEAR
Cashflow GHC
The bank is convinced with the proposal and has agreed to give the said amount at an interest of per annum subject to an expert advice. The bank has therefore hired you as a project financial consultant to advice the management of the bank on the financial viability or otherwise of the project. Your findings will help the bank take a decision in the loan advance. Your presentation must be centered on the following financial appraisal techniques stating your reasons in each case
i Simple payback method
ii Net present value
iii. Profitability Index PI
iv Internal Rate of Return IRR
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