The management of Faulu Limited is contemplating to invest in 8 projects. The capital expenditure...
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Finance
The management of Faulu Limited is contemplating to invest in 8 projects. The capital expenditure during the year has been rationed to sh.500,000 and the projects have equal risk and should be discounted at the firms cost of capital of 10%
Project
Cost (sh.)
Project life (years)
Cash flow per year (sh.)
A
B
C
D
E
F
G
H
400,000
50,000
100,000
75,000
75,000
50,000
250,000
250,000
20
10
8
15
6
5
10
3
58600
55000
24000
12000
18000
14000
41000
99000
Required:
Determine the optimal investment sets. (10 marks)
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