e) As the CEO of Greatminds Company Limited, with a passion to boost employment creation through intraregional tourism in Ghana, you have acquired a land at Ho to put up an exquisite amusement park that features a number of attractions including games, pools, gardens, rides etc. You have planned to move on to something else after four years and sell off. After careful research into this market, you have narrowed your selection of entertainment attractions down to two choices: (1) A roller coaster; (2) Sea world experience. The net cash flows below show forecast of how each attraction will perform over the 4-year period (including the price you would receive for selling in Year 4). You see these projects as imperfect complements to one another due to limited space. You have also made subjective risk assessments of each project and concluded that all of them have risk characteristics that require a return of 12%. Here are the net cash flows (in thousands of Ghana cedis):

i) Using the discounted pay back approach which of the two projects will be repaid faster?

ii) What are the net present values (NPV) of the two projects and what do these values mean?

iii) Which one of the projects has the most desirable internal rate of return (IRR)?

iv) Whenever there are conflicting conclusions between the NPV and the IRR, the IRR is always superior. Comment on this assertion.

Year (n) Expected Net Cash Flows Roller coaster Sea world experience -500 -700 120 210 0 1 2 190 260 3 220 320 370 4 290