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You are the Project Analyst at Nangina Lid. where two projects are being considered for investment by the Board. Investment details of these projects are
You are the Project Analyst at Nangina Lid. where two projects are being considered for investment by the Board. Investment details of these projects are set out below: Investment Present value of Present value of Present value of Net present value of outlay in Period 1 outlay in period 2 outlay in period 3 investment at t=0 Ksh'000 Ksh'000 Ksh'000 Ksh'000 A 30,000 10,000 10,000 56, 000 B 20,000 4, 000 2, 000 8, 000 Capital investment limits as set by the. Board of Nangina Ltd. as follows: Period 1 Ksh 36,000,000 Period 2 Ksh 8,000,000 Period 3 Ksh 6,000,000 Assuming that the capital investment limits are absolute and cannot be repeated more than once: a. Determine the best combination of these projects in order to maximize the net present value (NPV) and find that maximum NPV (15 Marks). b. Write a brief paper to the Board of Nangina Ltd. explaining why you have chosen to use the NPV approach to project selection in the above analysis
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