Question ONE: Assume that you are the Chief Accountant of Delia Farms plc, which is a mechanised agricultural farm. In the recent past, your company has requested you to consider capital investment in new projects in order to diversify your income base. You engaged Loctra as an individual Financial Consultant, following the normal a completive bid process after advertisement. He emerged the winner after beating the others largely because of his strong technical and financial proposals submitted. The consultant determined information on three types of projects to undertake i.e. projects (X), (Y) and (Z) and presented the following information to you as the Chief Accountant of Delia Farms plc. He estimated the Free Cash flows for all the three projects for a period of 4 years. The initial cash outlay that was budgeted for the project was K10, 000,000 to be invested at the beginning (year o). The cost of capital is at 15%. The consultant determined the cash-flows for project (X), (Y) and (Z) were as follows: YEAR 0 1 2 3 4 PROJECT :X-10,000,000 4,000,000 3500,000 1830,000 1860,000 Y -10,000,000 5,000,000 1750,000 2,950,000 1,800,000

Z-10,000,000 5,500,000 3,300,000 1,800,000 1,950,000 Required: a). Calculate by using use the Net Present Value (NPV) method and select which project Delia plc should consider implementing and give reasons as to why you have selected that particular project. 15 Marks b). Identify and explain other methods that the Loctra, as the consultant of Delia plc could have used to determine which project to undertake