Slow Fashions Ltd is considering the following series of investments for the current financial year 2009: Project bid proposals (Rs000) for immediate investment with the first cash return assumed to follow in 12 months and at annual intervals thereafter. Project Now 2010 2011 2012 2013 2014 2015 NPV IRR P0801 620 280 400 120 55 16% P0802 640 80 120 200 210 420 30 69 13% P0803 240 120 120 60 10 20 15% P0804 1000 300 500 250 290 72 13% P0805 120 25 55 75 21 19 17% P0806 400 245 250 29 15% There is no real option to delay any of these projects. All except project P0801 can be scaled down but not scaled up. P0801 is a potential fixed three-year contract to supply a supermarket chain and cannot be varied. The company has a limited capital budget of Rs1.2 million and is concerned about the best way to allocate its capital to the projects listed. The company has a current cost of finance of 10% but it would take a year to establish further funding at that rate. Further funding for a short period could be arranged at a higher rate. Required: a) Draft a capital investment plan with full supporting calculations justifying those projects which should be adopted giving: i. The priorities for investment, ii. The net present value and internal rate of return of the plan; and iii. The net present value per dollar invested on the plan. b) Estimate and advice upon the maximum interest rate which the company should be prepared to pay to finance investment in all of the remaining projects available to it.