Question
Your CEO is in a dilemma as to how to utilise the company's tract of land close to the central business district of Accra. He
Your CEO is in a dilemma as to how to utilise the company's tract of land close to the central business district of Accra. He contemplates two project an automobile packing lot or a mixed development with several small stores at street level and apartments on the upper levels. The initial investments for the car park and the mixed development are and 19,000,000 respectively. The cost of capital to the company is 12%. The respective cashflows for the projects are indicated in
Table 1. Table I: Cashflows of roects Year Car park Mixed development 1 2,200,000 .
You have been invited by your CEO as the company's project expert and would like to know which Iternative project will maximise the company's wealth. a Which project would you recommend to your CEO? Support your choice with evidence of analysis (30 points).
b. Which project is preferred from the perspective of discounted payback period? Support your decision with evidence of analysis (20 points).
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