1) A company is considering two alternative projects with initial costs and projected revenues (each in thousands of sterling pounds) for the next five years as shown in the Table below. The Company can start only one project: Use a discounting rate of 12% to find the better of the two projects and justify your answer.

2) You plan to purchase a house at the end of 5 years and set up a sinking fund to set aside a sum of money each year. The house is expected to cost 200,000 at the end of five years. The interest rate applicable is 6.5%? Explain your answer.

3)In Question 2) above if you plan to make a lump sum investment today of 130,000 on the same terms

a).would you be able to purchase your house?

b).If so how much excess would you have at the end of five years, of not what balance amount would you need after five years to purchase your house

c).Assuming you were 40,000 short and decide to invest a lump sum today to meet this shortfall, how much should your additional investment be?

4) Demand for an item is steady at 30 units a week and the economic order quantity is 50 units.

What is the reorder level when the lead-time is a) 1 week, b) 2 weeks and c) 1month?

5) A home based cake business estimates its demand for cakes at 1000 cup cakes a month. Unit cost is 2.50, reorder cost is 50 and holding cost is 30 per unit a year.

What are the a) economic order quantity, b) cycle length and c) total costs?