project

Question 1 (25 marks) A. For most managers, financial criteria are the preferred method to evaluate project. As a new project engineer at ATG Pte. Ltd., you are supplied the following data to evaluate for two new projects namely AGO and BGO. The AGO project will cost $150,000 initial investment to develop and projected to have annual net cash flow of $40,000 for 4 years. The BGO project will cost $200,000 to develop and is expected to have annual net cash flow of $50,000 for 5 years. Assume that both projects aim at the minimum desired rate-of-return (discount rate) of 20% Evaluate these projects and recommend them for financial approval. (12 marks) B. As the team head for a project BA Record, your team is considering three (3) different recording projects. Based on previous track record, BA Record expects at least a rate of return of 20 percent. The information from National Bank predicts inflation to remain at 2 percent into the foreseeable future. The following recording projects as in Table l is handed to you for your team consideration Table 1 Recording projects Project: Time Year Investment Revenue Stream 0 $600.000 1 600,000 2 75,000 3 20.000 14 15,000 5 10.000 Project: Moon Year Investment Revenue Stream 0 $400,000 0 1 400.000 2 100,000 3 25,000 20.000 5 10,000 0 Project: Tonight Year 0 1 Investment $200.000 Revenue Stream 0 200,000 125.000 75,000 20.000 10.000 3 4 5 Evaluate the above proposals and lay out your team priority based on return on investment for fund approval. (13 marks)