VERY URGENT

STUDENT CENTRE KM (b) Black Lid has set aside Shs. 70 million for investments in the year 2020, Five proposals are presented to the company's board of directors by the finance manager as shown below Life of project Project Initial cost Annual fixed Costs Annual revenue Shr, 000 Shs. 000 Shs. 000 Shs. 000 A $ B 10,000 30,000 15,000 12,000 25,000 30,000 18,000 17,000 5,000 8,000 4,000 5,000 4 C 10 D 18,000 8,000 2,000 14 e Additional information: Projects A and D are mutually exclusive Each project is indivisible and can only be undertaken once Variable costs are 15% of annual revenue All cash flows will occur at the end of the year. Cost of capital is 10%, ignore taxation . Required: Determine the optimal allocation of the 70million amongst the five projects and the net present value resulting from this allocation. (8 marks)