The subject of Financial management// civil engineering

Q1 . Adamson Capital Group is considering allocating a limited amount of capital investment funds among four proposals. The amount of investment and cash flows for each proposal are as follows:

proposal	investment	probabillity	cash flow
proposal A	450,000RM	01 04 0.4 0.2 0.1	150.000RM 150.000RM 150.000RM 90.000RM 90.000RM
proposal B	250,000RM	0.1 0.4 0.4 0.2 0.1	100,000RM 90,000RM 80,000RM 65,000RM 65,000RM
proposal C	640,000RM	0.1 0.4 0.4 0.2 0.1	220.000RM 210.000RM 210.000RM 190.000RM 160.000RM
proposal D	310,000RM	0.1 0.4 0.4 0.2 0.1	130,000RM 100,000RM 60,000RM 60,000RM 60,000RM

The policy of the company requires a maximum payback period of three years. Besides, a minimum average rate of return of 12% is required on all projects. 1. Calculate the payback period for every four proposals. Round to nearest month 2. For further analysis, Calculate the Net Present Value (NPV) using a rate of 12% 3. Calculate the Profitability Index for each proposal 4. Based upon the analysis, rank the proposals from most attractive to least attractive (as in Table. Then, discuss the relative attractiveness of the proposal.

Proposal	payback period	net present value	profitability index	accept or reject

5. To determine the project risk, calculate the expected cash flow, standard deviation and coefficient variation. (6 marks) 6. Based on the result in question (5). The company has decided to further analysis using the risk-adjusted discount technique. A minimum rate of return of 13% for the less risky project and 16% for the higher risk project (tips: choose only one less risky project and one high riskier project). (6 marks) 7. Lastly, explain which project should the company undertake based on risk explanations?