QUESTION 1 Due to the recent upsurge in the electricity power outage, the residents of "Putamis-Kponkope", a village in the North Tongu District unanimously voted to replace their domestic energy with a Government Pilot Solar Project - dubbed "Solar for all 2025". Under this project, the lead financiers, the International Finance Corporation (IFC) in partnership with the Government of Ghana want to assess whether to give the project to Akorkorma Sisi in Upper Manya District or Chiana in Kasena Nankana West District at an initial investment of Ghe750,000.00 to all the localities. As a postgraduate student of GIMPA, you are to assist your Government with investment appraisal of these 3 projects using the information in the two tables. Table 1 Patamia-Kponkope Year 2 3 4 Net Cash inflow 125,350 215,240 285,025 315.000 305,500 Chiana Year 1 2 3 5 Net Cash inflow 145,000 305,500 370,000 325,000 409.975 Akorkorma Sisi Year 1 2 3 4 Net Cash inflow 170,000 195,000 244,500 343,000 0 4 Note: IFC is interested in the project being self-financing with a discount rate of 24.2% per annum Page 4 of 6 1. Which of these rural settlements would you advise your Government to invest in und why? (Show all workings-use table 1). (9 Marles) b. Now, based on your earlier recommendations (a), the project financiers decided to vary the initial investments of all the 3 projects as PatamiaKponkope - Ghe850,000 China GH.760,000 and Akorkorma Sisi-GHC 775.000. However, in varying it initial investment, the discount rate for only Akorkorma Sisi was reduced to 24% per annum What would be your advice after such a decision? (Show working in (3 Marks) c. Now, considering that you are to recommend only one locality, based on your answer in question (b) which of the localities should they invest? Remember to show all workings using profitability index) (3 Marks d. Distinguish between the Payback period and Internal Rate of Return (3 Marks) e List two reasons for preferring NPV over other methods of evaluating investment nnects