QUESTION TWO Coco was recently appointed to the post of investment manager of Dasa Ltd. a quoted company. The company has raised Sh. 8,000,000 through a rights issue. Coco has the task of evaluating two mutually exclusive projects with unequal economic lives. Project X has 7 years and Project Y has 4 years of economic life. Both projects are expected to have zero salvage value. Their expected cash flows are as follows: The amount raised would be used to finance either of the projects. The company expects to pay a dividend per share of Sh. 6.50 in one year's time. The current market price per share is Sh. 50. Dasa Lid. expects the future carnings to grow by 7% per annum due to the undertaking of cither of the projects. Dasa Ltd. has no debt capital in its capital structure. Required: (a) The cost of equity of the firm. (b) The net present value of each project. (c) The Internal Rate of return (IRR) of the projects. (Rediscount cash flows at 24% (6 marks) for project X and 25% for Project Y ). (d) Briefly comment on your results in (b) and (c) above. (e) Identify and explain the circumstances under which the Net Present Valus ((2) marks) (2) Internal Rate of Retum (IRR) methods could rank mettually exchusive (NPV) and the conflicting way. CAT (5 marks) (Total: 20 mects in a QUESTION ONE (Total: 20 marks)