Provide an evaluation of three proposed projects whose cash flow forecasts are found below:

	Potline 7a	Potline 7b	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	7,000,000	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 companys discount rate.

Ali was not surprised by the memo, for he had been expecting something like this for some time. ALBA followed a practice of testing each new financial analyst with some type of project evaluation exercise after the new hire had been on the job for a few months.

After re-reading the memo, Ali decided on his plan of attack. Specifically, he would first do the obligatory calculations of Payback, NPV, and IRR for all projects. Ali knew that the CFO would grill him thoroughly on Sunday morning about his analysis, so he wanted to prepare well for the experience. One of the things that occurred to Ali was that the memo did not indicate whether the three projects were independent or mutually exclusive. So, just to be safe, he thought he had better rank the projects under all assumptions in case he was asked to do so on Sunday morning. Ali sat down and made up the following "to do" list:

Required: Question 1

1. Evaluate the projects' acceptability using all three decision criteria (listed above) and based on the assumptions that the projects are both independent and mutually exclusive. (4 marks)
2. Compute Payback, NPV, and IRR for all projects. (3 marks)

c. Rank the projects according to Profitability Index (PI) and make a recommendation as to which (if either) should be accepted under the assumption that the projects are mutually exclusive. (2 marks)

please answer all parts