Queestion 4

Your line manager has been pleased with your work to date and has invited you to a meeting with the Marketing Director.

The Marketing team has completed research on a number of projects to encourage customers to return to the store.

Your line manager has asked for your written comments on the financial viability of four projects.

The costs associated with each project are as follows:

Project A	Project B	Project C	Project D
Initial Cost	750,000	750,000	390,000	570,000
Expected Cash Flow
Year 1	30,000	150,000	35,000	50,000
Year 2	85,000	275,000	180,000	195,000
Year 3	155,000	300,000	20,000	50,000
Year 4	2150,000	75,000	10,000	120,000
Year 5	250,000	170,000	160,000	200,000

Table of Discount Factors

	Rate percent
Year	4.5	5.0	5.5	6.0
1	0.9569378	0.9523810	0.9478673	0.9433962
2	0.9157300	0.9070295	0.8984524	0.8899964
3	0.8762966	0.8638376	0.8516137	0.8396193
4	0.8385613	0.8227025	0.8072167	0.7920937
5	0.8024510	0.7835262	0.7651344	0.7472582

REQUIRED:

a.Using appropriate project appraisal techniques assess and demonstrate the financial viability of each project.

b. Evaluate the methods of investment appraisal completed in part (a). Recommend the most appropriate project for the business.