tal Clever investment plc - Investment Appraisal Noc 30 Clever investment plc is considering various investment projects. They shortlisted three projects and asked a local financial analyst to recommend the best investment option. They provided the local analysts with following information about the projects: Project I will last for 5 years. The initial expenditure is 500,000 and the expected cash flow originating from the project is 200,000 each year of the project life. Project II will last for 5 years. The initial outlay is 400,000 and the expected cash flow originating from the project is 100,000 for the first four years of the project and 500,000 in the last year of the project. Project III will last for 5 years. The initial outlay is 150,000 and the expected cash flow originating from the project is 40,000 in the first year, 50,000 in the second year, 60,000 in the third year, 70,000 in the fourth year and 100,000 in the last year. The firm's cost of capital is 20%. You are required: (a) Evaluate the three projects using: (i) Payback Period (98/2 marks) (ii) Net Present Value (NPV) (21 marks) (b) Explain, which projects should be accepted, and why: (i) Using both Payback Period and NPV (2 marks) (ii) If the projects are mutually exclusive and there is no capital rationing (2 marks) (iii) If the projects are independent and indivisible, and the company has 1 million to invest. (5/2 marks) (c) Explain FIVE non-financial factors management would consider before making a final investment decision. (10 marks) (Total 50 marks)