Question: 5. Reading Builders is considering three possible investment projects: A, B and C. The expected pattern of cash flows for each project is: Project cash

5. Reading Builders is considering three possible investment projects: A, B and C. The expected pattern of cash flows for each project is:

Project cash flows

Project

A

B

C

m

m

m

Initial outlay

(20)

(20)

(24)

1 years time

11

12

9

2 years time

5

7

9

3 years time

7

7

11

4 years time

6

6

13

The business has a cost of finance of 7% and the capital expenditure budget for next year 44 million.

Required:

a) Calculate the NPV of each project. (20 marks)

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