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Question 4: (20) Big League Limited is in the process of evaluating four possible investment projects for its expansion drive. The projects are mutually exclusive.
Question 4: (20) Big League Limited is in the process of evaluating four possible investment projects for its expansion drive. The projects are mutually exclusive. The project cash flows are shown below. The firm's cost of capital is 12%. 1 2 3 Project Cash Flow Year 0 A -10 000 B -8 000 -16 000 D -14 000 6 000 4 000 8 000 10 000 6 000 4 000 8 000 10 000 6 000 4 000 8 000 10 000 4 6 000 4 000 8 000 10 000 4.1 Compute the Net Present Value for each of the four projects. (16) 4.2 Determine which project is acceptable in that it maximises shareholders' wealth. Provide a reason. (4)
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