a) A haulage company has three potential projects planned. Each will require investment in two refrigerated vehicles at a total cost of ksh. 120000. Each vehicle has a three year lease period. The projects are:
Project A
Lease the vehicle to a meat processing factory which will take the risks of finding loads to transport and will bear all driver costs for a three year period. Expected net cashflows are Ksh. 60000 per annum.
Project B
Enter into a fixed price contract for three years to carry frozen foods from processing plants. This will require employing drivers on permanent contracts.
Expected cash inflows after deducing all expected cash outflows are Ksh. 45000 per annum.
Project C
Employ a contract's manager to find loads for outward and return journeys but avoid any contract for longer than a six-month period. Expected net cash flows are Ksh 40000 in year 1, Ksh. 70000 in year two and Ksh 80000 in year three.
Required:
i. Pay back.
ii. Accounting Rate of Return
Net Present Value.

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The detailed answer for the above question is provided below i Payback Project A The payback period ... View the full answer