1)

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.

Project	Costs	1	2	3	4	5
A	500	50	200	200	100	50
B	1000	200	200	300	400	400

(Total 10 marks)

2) How much should a company put into a sinking fund each year to give 30,000 at the end of 10 years when expected interest rates are 15%? Explain your answer. (Total 7 marks)

3) TZT company pays for an extension to its premises by a mortgage of 40,000, over 25 years at an interest rate of 10% per annum. It repays the mortgage by regular instalments at the end of every year. How much should each instalment be?

Explain your answer. (Total 8 marks)

4) Demand for an item is steady at 20 units a week and the economic order quantity is 50 units.

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