Question
The management of Dunson ltd. is evaluating five investment projects whose expected cash flows (Sh., 000) are shown below: Project 1.1.2021 31.12.2021 31.12.2022 31.12.2023 A
The management of Dunson ltd. is evaluating five investment projects whose expected cash flows (Sh., 000) are shown below:
| Project | 1.1.2021 | 31.12.2021 | 31.12.2022 | 31.12.2023 |
| A | -60,000 | 30,000 | 25,000 | 25,000 |
| B | -30,000 | -20,000 | 25,000 | 45,000 |
| C | -40,000 | -50,000 | 60,000 | 70,000 |
| D | 0 | -80,000 | 45,000 | 55,000 |
| E | -50,000 | 10,000 | 30,000 | 40,000 |
All the projects are divisible and non can be delayed or brought forward. The required rate of return on investments is 15%.
Using Excel program: Assuming that the capital available on 1.1.2021 is limited to Shs.100 million, use the Net Present Value (NPV) approach to determine which projects(s) should be undertaken.
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Auditing And Other Assurance Services
Authors: Alvin Arens, James Loebbecke, W Lemon, Ingrid Splettstoesser
9th Canadian Edition
9780130091246
