QUESTION ONE (20%)

A named international business company intends to invest in Zambia. You have been employed as an international business manager resident in Zambia to carry out a feasibility study.

Briefly discuss using practical examples how you would conduct each of the following:

Market assessment

Production assessment

Legal environmental assessment

Human resource assessment

Suppliers assessment

Credit policies assessment

Management and organisation assessment

Professional and advisory support assessment

Suppose the above named Business Company requires an investment of $200, 000 and it is projected to generate an annual cash inflow of $50, 000. Calculate the payback period.

The named international business projects costs initially $25, 000 and generates yearend cash inflows of $9, 000; $7, 000; $6, 000 and $5, 000 from one year to five years. If the required rate of return is 10%, calculate the Net Present Value (NPV).

If the company further projects costs $16, 200 and is expected to generate cash of $8, 000; $7, 000 and $6, 000 over a three year period. Calculate the companys Internal Rate of Return (IRR).