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QUESTION A firm is considering the following projects, all of which are independent of one another. The projects initial outlays, present value of future free
QUESTION A firm is considering the following projects, all of which are independent of one another. The projects initial outlays, present value of future free cash flows, NPV and Pl is mentioned in the table below. PROJ INITIAL TOTAL PRESENT VALUE ECT CAPITAL NPV PI NAM OF FUTURE FREE CASH OUTLAY IN SR E FLOWS Alpha SR500,000 SR 575,000 75,000 1.15 Beta 900,000 1,044,000 1.16 Gam 800,000 909,090 109,090 ma Delta 300,000 50,000 1.17 Thet 660,000 60,000 1.10 a Lamb da 700,000 900,000 200,000 1.29 Sigm 600,000 880,000 280,000 1.47 a A. FILL the shaded areas in the table above with appropriate values as shown in the project EF as an example. (2marks) B. Available fund for the current period is SR 3 million, considering the capital rationing for this capital budget period, recommend the Set of projects for investment and calculate the total NPV of recommended set of projects. (2 marks)
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