Cavendish University Uganda Faculty of Business and Management Department of Accounting and Finance BBF 222 Financial Management Course Assessment Test 1 INSTRUCTIONS TO CANDIDATES: 1. Upload your work not later than 27th March, 2022. The Company. The company is considering two mutually exclusive projects. Both require an initial cash outlay of UGX. 10,000,000 each, and have a life of five years. The company's required rate of return is 10%. The cash flows expected to be generated by the projects are as follows: Year Project A Project B UGX. 000 UGX. 000 0 (10,000) (10,000) 1 4,000 6,000 2 4,000 3,000 3 4,000 2,000 4 4,000 5,000 5 4,000 5,000 Calculate from the above the following: a) i) Pay Back period (PBP).............................................3 Marks ii) Average Rate of Return (ARR)....................................3 Marks iii) Net Present Value (NPV)............................................3 Marks iv) Internal Rate of Return (IRR).......................................3 Marks v) Profitability Index ( PI)..............................................3 Marks b) Basing on the results obtained in each of the Appraisal Techniques, determine in each case the Project between Project A and B that is preferable and why?...........................................15 Marks Total: 30 Marks.