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 . m (20) 11 B m (20) 12 m (24) 9 Initial outlay 1 year's time 2 years' time 3 years' time 4 years' time 5 7 9 7 7 11 13 6 6 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) b) Which investment project(s) should the business undertake assuming: (i) Each project is divisible (ii) Each project is indivisible. (20 marks)

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