The management of Dawanu Ltd. is evaluating five investment projects whose expected cash flows are shown below:
1. None of the five projects can be delayed or bought forward.
2. All the projects are divisible
3. The required rate of return on investments is 15%
i) Using the net present value (NPV) approach, determine which project(s) should be undertaken assuming capital will be available when required.
ii) Using the NPV approach, determine which project(s) should be undertaken assuming capital available on
1 January 2006 is limited to Sh.100 million
i) Project appraisal
In addition, the whole of project D would be undertaken, since this requires no year o outlay.