MY GIVI IV. for the world To: Ali Yaqoob Yusuf alba From: Bryan Harris, Chief Financial Officer, ALBA Aluminium RE: Capital Budgeting Analysis www.albasmelter.com Provide an evaluation of three proposed projects whose cash flow forecasts are found below. Potline 7a Potline 7 Potline 7c Initial Outlay BHD (11,000,000) BHD (16,950,000) BHD (14,100,000) Year 1 3,000,000 8,100,000 3,900,000 Year 2 3,000,000 2,900.000 3,900,000 Year 3 4,000,000 4.400,000 3.900,000 Year 4 0 (1,400.000) 3,900,000 Year 5 7,000,000 8.100.000 3,900,000 Year 6 17,000,000 8.100,000 3.900.000 Since these projects involve additions to ALBAs portfolio of high-quality aluminium product line, the company requires a rate of return on those projects equal to 11,90% As you are no doubt aware, ALBA relies on several criteria when evaluating new investment opportunities. In particular, we require that projects that are accepted have a payback of no more than 4 years provide a positive NPV and have an IRR that exceeds the company's discount rate