The finance director of Ruslan plc is considering several investment projects and has collected the following information about them.

Project Estimated Initial Outlay $()$ Cash inflow Year $1$

$()$ Cash inflow Year $2$

$()$ Cash inflow Year $3$

$()$

A $200,00050,000150,000150,000$

B $450,000357,000357,000357,000$

C $550,000863,000853,000853,000$

D $170,000278,000278,000$ Nil

E $200,000250,000250,000250,000$

F $330,000332,000332,000$ Nil

Project D and E are mutually exclusive. The capital available for investment is limited to $1$m in the first year. All projects are divisible, and none may be postponed or repeated. The cost of capital of Ruslan plc is $15\%.$

a$.$ Discuss the possible reasons Ruslan plc may be limited as to the amount of capital available for investment in its projects. $(5$ Marks$)$

b$.$ Determine which investment projects the finance director of Ruslan plc should choose to maximise the return on the capital available for investment. If the projects were not divisible, would you change your advice to the finance director? $(20$ Marks$)$

c$.$ Discuss the argument for and against each investment appraisal method $($NPV$,$ IRR, ROCE, and Payback$)$ to support your decision$/$advice$.(10$ Marks$)$

d$.$ Critically discuss the reasons why net present value is the method of investment appraisal preferred by academics? Has the internal rate of return method now been made redundant? $(5$ Marks$)$

$($Total $40$ marks$)$